Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

MALLAIG HARBOUR ORDER CONFIRMATION

Mr. Gordon Campbell presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Mallaig Harbour: And the same was read the First time; and ordered to be considered upon Tuesday next and to be printed. [Bill 128.]

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Rhodesia

Mr. Strang: asked the Secretary of State for Foreign and Commonwealth Affairs if he will list the countries to whom he has made representations with regard to the operation of sanctions against Rhodesia.

The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): No, Sir. We make available to the United Nations Sanctions Supervisory Committee information about suspected breaches of sanctions. But our Notes are not proof of any offence and it would be misleading to list countries named. However, the annual reports of the committee record these Notes and the results of inquiries.

Mr. Strang: Does the Secretary of State accept that, as the administering Power

still responsible for Rhodesia and the country which initiated the question of sanctions in the Security Council, we have a special responsibility in this matter? When there is a scandal such as the Boeings affair, is it not reasonable to expect the British Government to take the lead in asking for an inquiry into that sort of situation?

Sir Alec Douglas-Home: On the subject of the Boeings we have taken a lead, as I shall say in answer to another Question. All that I am saying now is that to name the countries would be misleading, but the hon. Member can find them, if he likes, in the reports of the committee.

Sir G. Nabarro: Is it not the case that the Boeings were ordered through a South African consortium, in its name, and later transplanted into Rhodesia, all of which would have been a perfectly legal deal, since the South Africans have never lent support to our sanctions policy against Rhodesia?

Sir Alec Douglas-Home: No, Sir, I do not think that that was how it happened at all.

Mr. Richard: Does the Secretary of State agree that, given the present political situation in Rhodesia, this, perhaps, is particularly the time when, far from seeking to weaken sanctions, we should be trying to strengthen them? Is he prepared to consider the possibility, and later make a statement to the House about the effect of his consideration, by such ways as may be open to him—various suggestions have been made, which the Government have not as yet accepted—of strengthening sanctions?

Sir Alec Douglas-Home: I have not yet found a way. I think that the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) made a suggestion that the United Nations committee might employ an ombudsman. I am willing to consider that, but the committee's secretary is one of Dr. Waldheim's executives. I think that its machinery is adequate to find out. It is the political will of different countries that is missing.

Mr. David Steel: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make proposals to the


United Nations Sanctions Supervisory Committee with a view to blocking the loophole that allowed the supply of Boeing airliners to Rhodesia.

Mr. Judd: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the action taken by Her Majesty's Government to strengthen sanctions against Rhodesia following the successful purchase by the illegal regime of three Boeing aircraft.

Sir J. Langford-Holt: asked the Secretary of State for Foreign and Commonwealth Affairs following the acquisition by Rhodesia of three Boeing aircraft, whether he will make a statement on the efficacy of United Nations sanctions and their continuation.

Sir Alec Douglas-Home: We have passed to the United Nations Sanctions Committee such fresh information about this sale as we have received. What is lacking is not new measures or machinery but the political will to make the present measures fully effective.

Mr. Steel: Can the Foreign Secretary give the House any more information as to the origin of the sale? Secondly, what steps are being taken by the United States Government to make sure that there is no follow-up in the supply of essential spares?

Sir Alec Douglas-Home: On the latter point, I have no reason to think that there is any supply of spares. I shall look into the matter. Concerning the origin of the Boeing sales, we do not publish what we send to the United Nations committee until it has had a look at it. It seems to me that it has been through firms in three countries, of which South Africa is not one—as far as we know. This is a complicated matter, which the United Nations must examine first.

Mr. Ronald Bell: Does not my right hon. Friend consider that after seven years it is time for us to realise that we are wrong, root and branch, about the whole business and drop these absurd sanctions, which are in any case wholly invalid under the Charter of the United Nations?

Sir Alec Douglas-Home: I have said that if I altered my view about sanctions I would tell the House. But as long as

there are mandatory sanctions they had better be observed by other countries to the extent that we observe them.

Mr. Judd: In view of the rôle of Portugal in facilitating the routing of these Boeings to Rhodesia, has not the time come to call off the official jollifications with the Lisbon Government? How long are we expected to go on cheapening ourselves at Lisbon's behest? What is the Government's policy towards the forthcoming visit to Lisbon by the Duke of Edinburgh? Is he expected to congratulate the Portugese Government on their effective support for an illegal regime, in rebellion against the Crown?

Sir Alec Douglas-Home: There may be an implication in the hon. Gentleman's question that the Portuguese Government had something to do with the Boeings. As far as I know, there is no foundation for that. I had better make that clear. As the hon. Gentleman knows, the Portuguese alliance with Britain is 600 years old. It is an alliance in which both countries have taken pride, and I think we ought to celebrate it.

Mr. Biggs-Davison: Is not the application by the hon. Member for Roxburgh, Selkirk and Peebles (Dr. David Steel) of the word "loophole" to these ludicrous sanctions the understatement of the day?

Sir Alec Douglas-Home: It would take quite a loophole to get through 240 million dollars worth of export trade.

Mr. Haselhurst: asked the Secretary of State for Foreign and Commonwealth Affairs if he will estimate the annual cost to the United Kingdom of the maintenance of sanctions in respect of Rhodesia over the next five years.

Sir Alec Douglas-Home: It is very difficult to speculate on what the situation will be during the next five years, but I can say that from 1st April 1972 to 31st March 1973 the cost to public funds was approximately £3 million.

Mr. Haselhurst: Will my right hon. Friend explain whether that is merely the direct cost of maintaining sanctions, rather than the consequential loss of trade? Further, will he say whether, in any calculations it has undertaken, his Department has taken into account the


possible economic loss to this country which would arise by the reaction of other States if we were to drop sanctions?

Sir Alec Douglas-Home: I was talking about direct expenditure. Incidentally, a good deal, or part of that expenditure, has been due to payments which we have to make to the International Bank for Reconstruction and Development in relation to the Kariba Dam—which is an old story. However, we are liable for those payments. These are direct calculations. Trade between southern Africa —that is, South Africa, Rhodesia and Portuguese Africa—and the rest of Africa —is about level.

Mr. Whitehead: asked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied with the operation of the surveillance procedures of Her Majesty's Government regarding United Nations mandatory sanctions against Rhodesia.

Mr. Molloy: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement regarding investigations into the operation of sanctions against Rhodesia.

Sir Alec Douglas-Home: Yes, Sir. The United Kingdom has an exemplary record for sanctions enforcement. Eighteen British firms and individuals have been convicted and fines totalling over £200,000 have been imposed by the courts.

Mr. Whitehead: As the arrival of the three Boeing aircraft plainly indicates flaws in the surveillance procedures, will the right hon. Gentleman tell the House a little more about Her Majesty's Government's plan by way of ex post facto operations in this matter? Does he regard these aircraft as registered Rhodesian aircraft, stateless aircraft, or anything else? Will he give an undertaking to the House that they will not be insured by or through British insurance? Will he say whether any loyal Rhodesian subjects who remove these aeroplanes from Rhodesia and bring them to Britain or to a British dependency will not be prosecuted under the Protection of Aircraft Bill, which is currently before the House?

Sir Alec Douglas-Home: I understand that these Rhodesian aircraft can fly only on routes on which Rhodesian aircraft already fly. I answered an earlier question about spares. There is no question of spares reaching these aircraft. The sort of thing which the hon. Gentleman suggests would be a breach of sanctions.

Sir J. Langford-Holt: Yesterday the Prime Minister said that in his view the imposition of sanctions had had some effect on the bargaining position that Mr. Smith adopted. Arising from that, will my right hon. Friend say whether it is the Government's view that sanctions are doomed to failure, or that they will succeed? If it is their view that they will succeed, when will they succeed? Does my right hon. Friend agree that, clearly it is not a case of weeks or months?

Sir Alec Douglas-Home: That has been true, but it is clear that sanctions have had some effect. Rhodesia is desperately short of foreign exchange and some other goods—for example, rolling stock. However, to think that sanctions would have a decisive political effect on a short-term basis was a miscalulation.

Mr. Raphael Tuck: Has the right hon. Gentleman made any attempt to persuade the United States to stop betraying the United Nations' sanctions policy by continuing to import vast quantites of chrome from Rhodesia? The principle of sanctions comes before the consideration of profit.

Sir Alec Douglas-Home: The United State advances the argument not of profit but of security. If the United States did not import chrome from Rhodesia it would have to get all its chrome from the Soviet Union.

Mr. Brocklebank-Fowler: In an earlier reply my right hon. Friend mentioned the illegal regime's need for rolling stock. Has he any evidence that the regime has purchased rolling stock, including locomotives, in recent months?

Sir Alec Douglas-Home: I should like notice of that question. At the moment I cannot remember whether there has been any evidence of such a purchase.

Mr. Bruce-Gardyne: asked the Secretary of State for Foreign and Commonwealth Affairs what was the change in the level of exports from Rhodesia between 1971 and 1972; and what has been the average annual increase in the Rhodesian gross domestic product at constant prices since UDI.

The Minister of State for Foreign and Commonwealth Affairs (Lord Balniel): Figures published by the Rhodesian authorities, the accuracy of which Her Majesty's Government have no way of checking, suggest that Rhodesian exports may have risen by over £30 million and that the average annual increase in the Rhodesian gross domestic product since UDI was about 5 per cent.

Mr. Bruce-Gardyne: I am most grateful to my right hon. Friend for that information. Would it not be rather nice if we could find somebody to impose sanctions on us? Does he consider that it would be worth being described as a member of a regime in order to achieve something of this nature?

Lord Balniel: My hon. Friend must also take account of the fact that the Rhodesian authorities tend to paint a rosy picture of their economic affairs. They are very selective in their choice of statistics, and their statistics frequently have to be revised.

Mr. Maclennan: If he has not already done so, will the right hon. Gentleman consider raising this matter and also the control of imports into Rhodesia in the D'Avignon Committee? It appears that some of our new European friends are not quite ad idemwith us on the problem of sanctions. In particular, will he seek to develop a common foreign policy in Western Europe on the implementation of sanctions?

Lord Balniel: Questions concerning the implementation of sanctions are a matter for the Sanctions Committee of the United Nations. It is best that such matters are left in the committee's hands.

Mr. Thorpe: Is there not some merit in the proposition that hon. Members who take an oath of loyalty to the Crown should not glory in a rebellion against the Crown? Should they not at least join the rest of the civilised world community in trying to bring rebellion to an end, and to bring about a non-racial solution,

which is the only alternative to bloodshed and civil war? Those are the inevitable consequences unless we can get a settlement.

Lord Balniel: The right hon. Gentleman is making a premise which would not be accepted in the House. I know of no hon. Member who glories in a rebellion—[HON. MEMBERS: "We do."] I believe that the great mass of hon. Members are anxious to reach a political solution in the interests of people living in Rhodesia, in accordance with the general principles which are widely accepted in the House.

Mr. Evelyn King: Economics and sentiment apart, is not one of the difficulties about the imposition of sanctions —a difficulty that has been apparent throughout history and not merely in the case of Rhodesia—the fact that they have always served to strengthen the regime against which they are imposed? Is it not a fact that Mr. Smith's position— he is almost alone in being Prime Minister of Rhodesia for so long—has been immeasurably strengthened by sanctions? Is not that a matter to which the Foreign Office should give real attention?

Lord Balniel: My right hon. Friend has stated frequently in the House that if he had any reason for believing that sanctions had finally failed in their purpose he would explain the position to Parliament and make his decision. However, he has not reached that decision, and that is not the view of Her Majesty's Government.

Vietnam

Mr. Cormack: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will seek to pay an official visit to the Republic of Vietnam.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle): My right hon. Friend has no plans to do so at present.

Mr. Cormack: I understand the reason for that negative reply and I thank my hon. Friend for it. Will he comment on the great danger to Indo-China which is posed by the investing of Cambodia? Does this not place in jeopardy the whole future of the peace of this part of South-East Asia?

Mr. Royle: We greatly regret that North Vietnam has continued to send troops and military supplies into South Vietnam, in blatant disregard of the provisions of the agreement, and that it has also continued its military activities in Laos and Cambodia, once again in clear breach of the agreement.

Mr. Sproat: Will my hon. Friend comment on his recent talks with President Thieu, when he was in London?

Mr. Royle: My right hon. Friend the Prime Minister told the House that in his talks with President Thieu on 10th April he had had a first-hand account of the situation in the region. The Prime Minister assured the President of Her Majesty's Government's continued diplomatic support.

Mr. Dalyell: If we are talking about clear breaches in connection with Cambodia, does not the American air action also constitute a clear breach?

Mr. Royle: There is another Question on Cambodia on the Order Paper. The hon. Gentleman might like to ask his question then.

Foreign Service (Duncan Report)

Mr. Brocklebank-Fowler: asked the Secretary of State for Foreign and Commonwealth Affairs what action he has taken to reorganise the Foreign Service since the publication of the Duncan Report; and if he will make a statement.

Lord Balniel: Adjustments have been made in the scale and disposition of our overseas representation. This has contributed towards an 8 per cent. reduction in the size of the diplomatic service. The report did not propose a reorganisation but provided a set of guidelines for the more effective deployment and management of the service.

Mr. Brocklebank-Fowler: I thank my right hon Friend for that reply. Since he recognises the increasing importance of economic factors in foreign policy decisions, is he satisfied with the organisation of the export Department, does he consider that his Department has adequate statistics on economic matters, and will he publish in the OFFICIAL REPORT a

chart showing how liaison on economic affairs is maintained between his Department and the Department of Trade and Industry?

Lord Balniel: The Government fully accept the conclusion of the Duncan and Plowden Committees that commercial work should be a first charge on the diplomatic service, and about 30 per cent. of the diplomatic service staff overseas are engaged on this work. The provision of statistics on economic affairs is certainly an important part of the work of our commercial attachées overseas. They have to make their own assessments and I have no reason to believe that the statistics available to use are inadequate. As to my hon. Friend's suggestion of a chart, there is, of course, constant liaison between the Foreign Office and the DTI, but perhaps I could explain it to him in detail.

Mr. Goronwy Roberts: Will the Minister consider publishing a progress report on the extent to which the main recommendations of these two reports have been implemented by his Department, particularly in this vital field of strengthening commercial and economic representation on post, so that we get more detail than is possible in an exchange of questions and answers across the Floor of the House?

Lord Balniel: I shall certainly consider the right hon. Gentleman's point. Perhaps we may discuss it to see how we can most effectively make information available to the House.

Mr. James Johnson: Is the Minister able to divulge the reactions and the feelings in our high commissions overseas about the Duncan Report? From per sonal experience, I have found shivers of dismay at the terms and the findings, and what has been happening following the Duncan Report.

Lord Baniel: If the hon. Gentleman will give me specific examples of these shivers of dismay, I can make inquiries about them. I know that parts of the report are not enthusiastically welcomed and I shall certainly consider them. Perhaps, again we can discuss this matter together.

USSR

Mr. Sydney Chapman: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Anglo-Russian relations, with particular reference to the balance of trade between the two countries.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Julian Amery): My right hon. Friend the Secretary of State for Trade and Industry reported to the House on Monday on his recent visit to Moscow.—[Vol. 856, c. 4–5.]
I believe this visit will lead both to increased trade and also to a continued improvement in relations generally.

Mr. Chapman: We hope that the mission will lead to increased trade, but would not one of the best ways to improve relations between the United Kingdom and the USSR be to lessen the gap between our exports to that country— running at only £90 million—and our imports from that country—running at over £227 million? There is a responsibility on firms and industries in this country to sell more in Russia, but surely there is also a need for removing many of the political snags which these firms face in trying to sell goods in that country.

Mr. Amery: Yes, indeed, and my right hon. Friend represented that particular discrepancy very forcefully.

Mr. Fernyhough: Does not the right hon. Gentleman agree that for 20 years we have been inhibited in our trade with Russia because of the American Battle Act? How much smaller is the strategic list of goods which our manufacturers may not supply than it was five years ago? If there is an embargo, it means that it is impossible for our manufacturers, with all the good will in the world, to do the trade that they would like.

Mr. Amery: No, Sir. I doubt the hon. Gentleman's premise, because several of our EEC partners, to whom the same inhibitions apply, have been increasing their trade very successfully, and so has Japan.

South Africa

Mr. Leslie Huckfield: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement about his recent discussions with the South African Foreign Minister.

Sir Alec Douglas-Home: Dr. Muller called on me on 9th April. The principal topics were South West Africa, Rhodesia and, among various bilateral matters, the employment practices of British firms in South Africa.

Mr. Huckfield: In his talks with the South African Foreign Minister, did the right hon. Gentleman mention the subject of a possible visit to South Africa by a Select Committee of this House? As the official policy of Her Majesty's Government is, presumably, still against apartheid, and as many of us have seen with our own eyes the fact that British firms in South Africa, through the wages they pay and the employment conditions they operate for black Africans, are obviously propping up apartheid, is the right hon. Gentleman going to leave the whole matter to rest?

Sir Alec Douglas-Home: The matter of what the committee does or does not do is certainly not for me. It is for the committee to decide what it wishes to do. I cannot—and on second thoughts the hon. Gentleman would not wish me to do so—suggest to the committee what action it should take.

Mr. Thorpe: The Foreign Secretary was sufficiently broad-minded and internationalist to discuss with Dr. Muller the record of British firms operating in South Africa. Was Dr. Muller in return equally —in an internationalist sense—prepared to give an undertaking that he would do all that he could to see that the wages of those employed in those firms were correspondingly increased?

Sir Alec Douglas-Home: Dr. Muller said that the South African Government were interested in better pay for African workers. It was not his job to comment on the performance of British firms. But the Department of Trade and Industry has sent out a circular calling attention to the need for good employers.

Mr. Soref: Are not the wages paid by British firms in South Africa higher than those paid anywhere else in the African continent?

Mr. Huckfield: Rubbish.

Mr. Soref: Are not those countries which are receiving bounties from the British Exchequer in the form of aid paying the lowest wages?

Sir Alec Douglas-Home: Without notice I should find it difficult to give the necessary statistics. I understand that this is what the committee is to inquire into.

Mr. Alexander W. Lyon: Will the Foreign Secretary tell us something about the discussions that took place on Namibia? As the South African Government have made it perfectly plain that they would not respond to any kind of plan which would meet the view of the Security Council about Namibia, is it not now time that we enforced the International Court's judgment in this respect if we want to enforce its judgment in respect of Iceland?

Sir Alec Douglas-Home: Dr. Waldheim has been trying to arrange with the South African Government visits to Namibia, and there have been two which have been successful and have shown some advance. It is our hope that Dr. Waldheim will continue this operation.

Khmer Republic

Mr. Bryant Godman Irvine: asked the Secretary of State for Foreign and Commonwealth Affairs what recent steps have been taken by Her Majesty's Government to re-establish the International Control Commission in the Khmer Republic.

Mr. Anthony Royle: The political conditions do not yet exist in which the commission could function. Despite the provisions of the Paris Agreement for the withdrawal of foreign forces from Laos and Cambodia (Article 20) the North Vietnamese and their allies continue to promote hostilities.

Mr. Godman Irvine: Will my hon. Friend at least take the opportunity of making certain that the members of the Khmer Government are aware that many people in this House are sympathetic to and greatly appreciative of the work which the Khmer Government are doing

in resisting aggression from North Vietnam?

Mr. Royle: I am sure that the Khmer Government would welcome the remarks of my hon. Friend.

Mr. Dalyell: Has the Under-Secretary reflected on the question that I put to him on Question No. 2?

Mr. Royle: The hon. Member asked whether or not the Government had any views on the American bombing in Cambodia. There is, as I have indicated, no agreement on a cease-fire in the Khmer Republic, although the Republic has offered one. The United States bombing is at the request of the Khmer Government and is a reaction to an upsurge of military activity by North Vietnamese and Viet Cong forces in direct contravention of Article 20 of the Paris Agreement. They have endeavoured to block supply routes to Phnom Penh.

Mr. Dalyell: Are we supporting the Americans?

Mr. Peter Niesewand

Sir G. Nabarro: asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the governors of the BBC and the directors ofThe Guardianconcerning Mr. Peter Niesewand.

Sir Alec Douglas-Home: Officials of the Foreign and Commonwealth Office have been in touch with both the BBC and The Guardian about this case.
I warmly welcome the fact that the Rhodesian authorities have now released Mr. Niesewand so that he has been able to come to this country.

Sir G. Nabarro: I share the joy concerning Mr. Niesewand's release, but cannot my right hon. Friend take matters a little further by probing the whole of the background of this case in an effort to ascertain whether Mr. Niesewand's real fault, which was secreted by the Rhodesians, was that he transmitted information concerning sanction busting and the matter of the three Boeings illicitly smuggled into Rhodesia? What action does the Foreign Secretary, as initiator of sanctions against Rhodesia, propose to take in that matter?

Sir Alec Douglas-Home: None. The case of Mr. Niesewand has been examined by the courts in Rhodesia. Happily, he is free, and I should have thought it would be better to rest at that.

Mr. Calaghan: As it is clear that it has been the force of world opinion and public opinion in this country which has procured the release of Mr. Niesewand— [HON. MEMBERS: "No."] As it is clear that this was the only way in which it could be done, cannot the same force of opinion be brought to bear in connection with the Africans who are detained and about whom there has not been similar publicity, but who are just as innocent of the crimes similar to those of which Mr. Niesewand was convicted? Will the Foreign Secretary renew the representations he has made before and through him, may we ask the media whether they will give as much publicity to these other cases as they did to that of Mr. Niesewand?

Sir Alec Douglas-Home: The right hon. Gentleman's comments in the latter part of his question are very much to the point. I have made representations— and I shall continue to do so—that when people are detained they should be tried.

Mr. Wall: Does not the release of Mr. Niesewand illustrate the freedom and impartiality of Rhodesian courts— [Interruption.] Is it not strange that there has been such a furore about Mr. Niesewand, yet so little concern about the fate of Mr. Hawkesworth, who was captured by African guerrillas, who is a British subject and who, as far as we know, has been in their hands for several months? What is my right hon. Friend doing to secure his release?

Sir Alec Douglas-Home: We do not know exactly where Mr. Hawkesworth is. He is not in Rhodesia, but he is, we think, in some other African country. We are trying to obtain information as to his whereabouts.

Mr. Maclennan: Is the Foreign Secretary aware that the agreement he reached with Mr. Smith for the review of those in detention is wholly inadequate to the present situation, in that it provides for no active British participation whatever and relies upon a Rhodesian tribunal? Will he therefore take that part of his

agreement with Mr. Smith off the negotiating table and insist that the review be carried out with the full participation of British judges?

Sir Alec Douglas-Home: The hon. Member is not quite right. If I remember rightly, under the 1971 terms there was a proposal that certain detainees —over 30 of them—should be released immediately and that the cases of the rest should be considered by a tribunal at which there would be a British observer.

Portugal (Alliance Anniversary)

Mr. Biggs-Davison: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will seek, in consultation with the Portuguese Government, to include in the celebration of the sixth centenary of the Anglo-Portuguese alliance a naval goodwill visit to Sagres, in view of its association with Prince Henry the Navigator.

Mr. Anthony Royle: No, Sir. However, during their recent visit to Lisbon the Royal Navy paid tribute to the achievements of the Portuguese navigators. A wreath was laid at the Discoverers' Monument at Belem, and retreat was beaten at the nearby abbey, which contains the tomb of Vasco da Gama.

Mr. Biggs-Davison: I welcome what my hon. Friend has said. Is it not the case that this oldest alliance is today vital to the security of the Atlantic and the Cape route? Were not the disloyal and ignoble antics of a noble Lord in another place and the actions of pro-terrorist demonstrators utterly unrepresentative of the feelings of the British people, who hold Portugal in the highest esteem?

Mr. Royle: My right hon. Friend the Foreign Secretary made it clear in an earlier answer today that it is right and proper that we should celebrate the 600th anniversary of a very ancient alliance.

Dr. David Owen: Is it not wholly out of place that the two navies should have relations of close contact when, because of the action of the Portuguese in allowing oil to pass through Lourenco Marques, the British Navy continues the Beira patrol without sufficient effectiveness? Is it not time the Government


looked seriously at the practical possibility of extending the Beira patrol to cover Lourenco Marques and to stop oil going to Rhodesia through that port?

Mr. Royle: On reflection, no doubt the hon. Member will agree that Portugal's internal policies are not matters on which it would be appropriate for Her Majesty's Government to comment. He made the point that the British Navy is an ally of the Portuguese Navy. Indeed, it is. Portugal is our ally in NATO, and it is our policy, in that context, to develop businesslike and friendly relations with the Portuguese Government.

Icelandic Fisheries

Mr. James Johnson: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement regarding the London talks with the Icelandic Government upon the fisheries limits dispute.

Mr. Wall: asked the Secretary of State for Foreign and Commonwealth Affairs what communications he has had with the German and Icelandic Governments on fisheries limits.

Mr. McNamara: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the Icelandic fishing dispute.

Sir Alec Douglas-Home: I have nothing to add to what I told the House on 7th May. We remain in close touch with the Federal German Government about our respective negotiations with Iceland.—[Vol. 856, c. 36–44.]

Mr. Johnson: Is the Foreign Secretary aware that two days ago, in Hull, a joint action committee of owners, skippers and unions met and decided not to ask for naval intervention at this stage? Will he confirm that it is the policy of the Government to intervene if and when asked by the industry? Has he noted that since the talks finished there was one warp-cutting incident, but since that happened five days ago there have been no others? Does the Foreign Secretary consider this a happy augury for his possible meeting next week or the week after—I do not know—in Strasbourg, with Mr. Agustsson, and will he say that if he goes he will then talk

about future meetings with Iceland on this matter?

Sir Alec Douglas-Home: I shall certainly have an opportunity of seeing the Icelandic Foreign Minister in Strasbourg. I had noticed that there had been no warp cutting. I hope that the hon Member's interpretation is correct, and I shall keep my fingers crossed.

Mr. Wall: Every time there have been negotiations there have been considerable British concessions and virtually none from Iceland. Will my right hon. Friend seek to redress that balance? Will he see that officers in charge of frigates off Iceland have orders to intervene in any attempt to capture a British trawler without having to refer to Whitehall and waste time?

Sir Alec Douglas-Home: Ministers of Her Majesty's Government must control the operations of Her Majesty's Navy, and so I hope we shall give the necessary orders. But we want a compromise which will give us the catch that the industry thinks is adequate. We keep in close touch with the industry, and I hope that the House will leave the matter there.

Mr. McNamara: When replying to Questions earlier this week, the right hon. Gentleman said that the Icelandic Government had undertaken to study the latest batch of British proposals. Did they give any indication when they might be expected to reply, or are we merely waiting and hoping to work through intermediaries and chance meetings, at places where representatives of both Governments might happen to be, to arrive at a conclusion?

Sir Alec Douglas-Home: We said that we were willing to reopen negotiations at any time, but the Icelanders said that they could not yet give a date. I hope that they will take a decision very soon.

Mr. Laurance Reed: When the Icelandic Government made their 50-mile claim last September, did they not simultaneously make a claim to control pollution up to 100 miles from the coastline, which followed an early example set by Canada? Was that claim also discussed at the talks?

Sir Alec Douglas-Home: We have not discussed pollution.

Mr. Callaghan: I think that the House is ready to leave the matter where it is, as the right hon. Gentleman asked us, and we all hope that there will be a settlement. Nevertheless, in any further discussions with Iceland will he undertake to indicate to the Icelandic Government the strong view that some concessions must be made from their side, as well as from ours, if there is to be an agreement that will stand?

Sir Alec Douglas-Home: Yes, Sir.

Portugal (Detained British Subject)

Mr. Jessel: asked the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Portuguese Government concerning the detention of Mr. John Francis Rice, a British subject.

Mr. Anthony Royle: Mr. Rice was arrested in Lisbon on 20th February. No representations have been made to the Portuguese Government about his detention, but the British consul in Lisbon will continue to be in touch with the Portuguese authorities.

Mr. Jessel: Although I am in no position to comment on what, if any, charges may be under consideration, may I remind my hon. Friend that Mr. Rice has been imprisoned in Lisbon since 20th February without any charges yet having been preferred? I draw my hon. Friend's attention, in particular, to Mr. Rice's state of health. I understand that he has been diagnosed to be in need of an internal operation in the near future, and that he is in a run-down condition and has lost a great deal of weight. May I ask that representations be made, so that the finest possible medical services available in Lisbon are put at Mr. Rice's disposal, and that he be put on a diet so that he can gain strength before his operation? In view of his indifferent state of health, can the Portuguese authorities please be asked to take a compassionate view and give priority to coming to a decision about what action to take?

Mr. Royle: I have noted my hon. Friend's request. It is contrary to international usage for there to be governmental intervention, whether in civil or criminal proceedings, while the cases are still sub judice. However, I take the

point about Mr. Rice's physical condition. He has seen the prison doctor and has received attention at the prison hospital, and the consul has passed the medical history to the prison authorities.

Mr. Richard: Are the Government seriously saying, in relation to a British subject who has been in prison from 20th February to 9th May, and in respect of whom no charges have been brought, that they have not even seen fit to inquire as to the circumstances—to inquire of a country with whom, apparently, we are just about to celebrate 600 years of closeness and alliance?

Mr. Royle: It is quite possible to inquire as to the circumstances, but, according to international usage, to make formal representations is not possible until the subject is charged.

Communist Countries (Detained British Citizens)

Mr. R. C. Mitchell: asked the Secretary of State for Foreign and Commonwealth Affairs how many British citizens he estimates are in prison in the Soviet Union and other Communist satellite countries.

Mr. Emery: Three—two in Czechoslovakia and one in Bulgaria.

Mr. Mitchell: What representations have been made by the Government to try to secure the release of these people in Communist prisons? I hope that the House will always be fair, and that whether a British subject is in prison in Portugal or a Communist country the same representations will be made by the Government.

Mr. Amery: We have not made representations in these three cases because we have no standing to do so, in view of the nature of the charges.

Mr. Biggs-Davison: Nevertheless, will the Government use their influence in these cases? When my hon. Friend the Under-Secretary said that the case was sub judice, does not that denote the beginning of a judicial case? Do we understand that no case has been preferred against that British subject?

Mr. Amery: My hon. Friend must have misunderstood me. I did not say that the case was sub judice. All I said


was that we had no grounds on which to intervene. We have had consular access, and we are satisfied that the courts in those countries acted according to the law prevailing there.

Passports

Mr. Fowler: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the use of British passports by Israeli Government agents in obtaining entry to the Lebanon.

Lord Balniel: We have conclusive evidence that three of the people involved in the Israeli raid on Beirut on 10th April used falsified British passports. We have protested to the Israeli Government and have sought both an explanation and an assurance that this kind of thing will not be repeated. We do not regard as satisfactory the Israeli explanation that no Israeli personnel were carrying British or any other passports.

Mr. Fowler: I thank my right hon. Friend for that reply. His remarks will be echoed by many hon. Members. If he knows, will he say exactly how the false British passports that were used in the raid were obtained? Will he institute inquiries to see what the general position is, and how easy it is to obtain a false British passport?

Lord Balniel: Falsification can easily be undertaken by forgery or various alterations to a passport, but I shall look into my hon. Friend's general point. The evidence was passed to us on a confidential basis, and I am not at liberty to reveal it. I can, however, assure the House that it is utterly convincing.

Mr. Clinton Davis: Will the right hon. Gentleman give an assurance that espionage agents employed by the British Government will in future use only genuine United Kingdom passports on entering foreign countries? Will he acknowledge that the raid may have caused the Lebanese Government, who have for so long harboured terrorism in and near Beirut, to have second thoughts and thereby improve the prospects of peace in the Middle East?

Lord Balniel: I have no knowledge of any British personnel using the methods implied by the hon. Gentleman.

What he must understand is the grave danger caused to British citizens abroad by such an incident, which could create an utterly false impression that the British were implicated in the incident. It is a very grave matter, which we take extremely seriously.

Mrs. Joyce Butler: asked the Secretary of State for Foreign and Commonwealth Affairs if he will revise the passport regulations to enable a joint passport holder, when his or her spouse dies, to obtain a single passport at a reduced rate for the period outstanding on the joint passport.

Mr. Amery: No, Sir. To introduce passports at reduced rates would not be fair. It would give persons in this category an unjustifiable advantage over those who, for other reasons, apply for replacement passports at the normal fee.

Mrs. Butler: As the Minister rejects the suggestion I made, will he consider the possibility of deleting the deceased spouse's particulars officially from the joint passport, so that the surviving spouse may continue to use it without the distress of the continual reminder of the loss?

Mr. Amery: I think that there is some misunderstanding about the so-called joint passport. It is really a passport issued to a particular individual, but his wife and children are allowed to travel on it free. It is a concession made to the family; the passport is given to the husband, and the wife and children are allowed to travel free. It is not really a joint passport, but a passport issued to a particular man in accordance with an international convention.

Miss Fookes: Acting on the principle that constant dripping may wear away a stone, would my right hon. Friend be prepared to initiate the calling of an international conference to end the anomaly of the so-called joint passport and have it on a proper basis for each individual?

Mr. Amery: It is perfectly easy for everyone to have an individual passport, but about 20 per cent. of passports issued at present allow a man to take advantage of the concession for his wife and children. In parts of the country,


particularly in the North, about 50 per cent. of passports issued take advantage of what is quite an important concession, under which an individual secures a passport for £5 on which his wife and children can also travel, instead of having two passports, which would cost them £10.

Mr. William Hamilton: If a family passport is issued to a wife and she dies, can it be used equally by her husband and children?

Mr. Amery: Under the international convention the passport can be issued only to the man, to the husband. The United States has sought to breach that rule by making it possible for either a husband or a wife to have a passport issued in his or her name. I understand that not much advantage has been taken of that situation. That is because certain countries have not been prepared to accept a passport in the name of a wife, because it is contrary to the international convention.

San Francisco (Consulate General)

Mr. Edelman: asked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the administration of the British Consulate General in San Francisco.

Lord Balniel: Yes, Sir.

Mr. Edelman: I welcome the right hon. Gentleman's reply. It is especially welcome in view of the recent incidents at this consulate which have underlined earlier complaints.

French Nuclear Tests

Mr. Ronald Bell: asked the Secretary of State for Foreign and Commonwealth Affairs if he will now make representations to the French Government in support of the Australian and New Zealand Governments' objections to proposed French nuclear tests in the Pacific Ocean.

Sir Alec Douglas-Home: I have nothing to add to what I told the House on 2nd May in reply to a Question by the hon. Member for Salford East (Mr. Frank Allaun).—[Vol. 855, c. 1249–52.]

Mr. Bell: Although our general attitude to atomic tests has been made known to the French Government, have

we not quite a special relationship and obligation to Australia and New Zealand which should make us zealous to espouse their cause whenever we can? Would it not be unfortunate if, after acceding to the European Economic Community, we seemed to subordinate the special interests of the British overseas for fear of offending the French?

Sir Alec Douglas-Home: I would not consider doing that. But I have often made clear to the French what my hon. and learned Friend describes as the general attitude to these tests in the atmosphere. I said the other day that we hoped these tests would not be held.

Mr. John Mendelson: For the first time since 1st January, the Government now have a special opportunity, in view of the forthcoming visit by the Prime Minister to President Pompidou. Is it not now the duty of the Prune Minister to act as the spokesman of the Commonwealth countries which feel so very deeply about this matter? Would it not help generally if the right hon. Gentleman gave an assurance that the Prime Minister would act as a joint spokesman?

Sir Alec Douglas-Home: No doubt the Prime Minister and President Pompidou will talk about many questions, but I must remind the hon. Gentleman that Australia and New Zealand are independent Commonwealth countries. We do not speak for them.

Mr. Bruce-Gardyne: Does not my right hon. Friend agree that the need for these tests would be obviated if France were treated as an equal ally of the United States on the same basis as we are, which could be done without any infringement of the non-proliferation agreement?

Sir Alec Douglas-Home: It would depend whether the French were willing to enter into a system of testing atomic weapons with the United States.

Mr. Frederick Lee: Although Australia and New Zealand are independent countries, does not the right hon. Gentleman agree that the Samoans, the New Hebrideans and the Gilbertese are far more dependent on us than Australia and New Zealand can be, and that we have special obligations to them? Will the Government now discharge those obligations?

Sir Alec Douglas-Home: Yes. We monitor these tests in the interests of those places. They have not asked us to protest to the French.

Indonesia

Mr. Peter Archer: asked the Secretary of State for Foreign and Commonwealth Affairs if he will seek to pay an official visit to Indonesia.

Mr. Anthony Royle: My right hon. Friend paid an official visit to Indonesia in July 1972 and has no plans at present to pay a further visit. My right hon. and noble Friend the Secretary of State for Defence visited Indonesia in February this year.

Mr. Archer: Did either the noble Lord or the right hon. Gentleman point out to the Indonesian Government the concern of people here, who would like to see closer relations with Indonesia, at her reputation of being a country with about 55,000 political prisoners, which is probably a greater number in relation to the size of population, than anywhere else in the world?

Mr. Royle: No, they did not. The Indonesian authorities are aware of the concern in this country, as indicated by the hon. and learned Gentleman. He may be interested to know, however, that as far as we are aware none of those detained in Indonesia for alleged association with the Communist Party is a British subject.

Greece (Political Prisoners)

Mr. Goronwy Roberts: asked the Secretary of State for Foreign and Commonwealth Affairs what representations he has received during 1973 reflecting concern in Great Britain at the plight of political prisoners in Greece.

Mr. Anthony Royle: Ministers have received a number of written representations from Members of this House and the public.

Mr. Roberts: Have the hon. Gentleman and the Foreign Secretary read the letter in The Times of 30th April, signed by a number of members of the Cambridge University Economics Faculty, protesting against the Greek Government's treatment of Professor John

Pesmazoglou? There are reports that for the past fortnight or three weeks this distinguished international economist, himself a graduate of Cambridge, has been held incommunicado and has also been subjected to torture. Will the hon. Gentleman make clear to the Greek Government our official condemnation of this latest example of their policy of vicious political persecution, in flagrant violation of the Universal Declaration of Human Rights and of the European Convention on Human Rights?

Mr. Royle: I share the regrets of the right hon. Gentleman when friends of Britain are in prison anywhere, but official representations to another Government about their citizens raise difficult issues of jurisdiction. I understand that Professor Pesmazoglou has now been charged with conspiracy. I think, therefore, that it would be wrong for me to comment in detail or make a statement at this time.

Sir Elwyn Jones: Is the hon. Gentleman aware that many political prisoners in Greece, most of whom are, I think, friends of this country, are being detained in solitary confinement in the notorious military police interrogation centre in Athens, and are denied access to their families and to lawyers? Will he give due weight to these matters when arrangements are being discussed for the adherence of the United Kingdom to the Treaty of Association between the EEC and Greece? Indeed, will Her Majesty's Government undertake that unless these abominable practices are remedied we shall carefully consider that adherence?

Mr. Royle: Naturally I have noted seriously the right hon. and learned Gentleman's statement, but he knows that under the Treaty of Accession we are obliged to apply the provisions of the Community's agreements with third countries, including Greece, subject to any transitional arrangements or adaptations which may prove necessary. There can be no question of our saying—and I do not think that he will expect me to say—that we would seek to renege on our treaty obligations.

Mr. Orme: The hon. Gentleman says that there is difficulty in making representations. Is not Greece a member of NATO? Is there not a NATO code


about peace and freedom? If a member country is violating that code, have we not a responsibility to raise the matter with that Government?

Mr. Royle: Greece is a member of NATO but we have no responsibility to inquire into the internal arrangements of independent countries—and Greece is a country which is perfectly responsible to run her own internal affairs.

Pakistan (Aid)

Mr. Wilkinson: asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has held in the context of the Aid to Pakistan consortium; and when he expects to announce the United Kingdom's position with regard to the servicing of existing liabilities and future aid commitments to Pakistan by Her Majesty's Government.

The Minister for Overseas Development (Mr. Richard Wood): We took part in the Pakistan Consortium meeting on 22nd and 23rd March and, with some other donor countries, made offers of development assistance for the coming year, depending on satisfactory progress in resolving external debt questions. Discussions are continuing with the World Bank and other donors.

Mr. Wilkinson: I am grateful for that reply and for the decision in principle by the consortium, made on behalf of Her Majesty's Government. Does my right hon. Friend recognise that the consortium members decided that previous aid disbursed to Pakistan would be the responsibility of Bangladesh and Pakistan, according to which wing of the unitary State it was previously allocated? In that circumstance, will he take a positive view in the forthcoming negotiations?

Mr. Wood: My hon. Friend goes to the heart of the matter. This is the problem that has to be settled. It would be wrong for Her Majesty's Government to try to intervene in a matter which concerns Bangladesh and Pakistan, but we look to both countries to honour their external obligations.

Mrs. Hart: Is the right hon. Gentleman in a position to tell us—roughly, perhaps —how, as a result of the recent talks, the British aid contribution to Pakistan is likely to compare with our aid to Bangladesh and India?

Mr. Wood: I could certainly give the right hon. Lady the figures as far as they are available but, in relation to what I have just said to my hon. Friend the Member for Bradford, West (Mr. Wilkinson), a certain amount of the aid programme both to Pakistan and Bangladesh must depend on a satisfactory settlement of the question that he has brought to the House's notice.

Samoa (Aid)

Mr. Dalyell: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the level of British technical aid to Samoa.

Mr. Wood: We have a capital aid programme of about £50,000 a year and also a small technical assistance programme.

Mr. Dalyell: The Foreign Secretary has continually referred to the quality of the scientific advice he gets on radiation hazards—in Samoa and elsewhere— of French nuclear tests. Is the right hon. Gentleman's advice more distinguished than that of the double Nobel Prize winner, Dr. Linus Pauling, who has said that there will be 1,700 deformed babies in Australia, 1,500 of whom will die, and that the results in Polynesia and Samoa will be even worse? What medical help will be sent from this country to Samoa if the tests take place?

Mr. Wood: The hon. Gentleman is making all kinds of propositions which I could not accept.

Mr. Dalyell: They are facts.

Mr. Wood: It is also a fact that Western Samoa is an independent nation.

Mr. Dalyell: Answer the question.

Mr. Wood: I think it would be wrong for us to anticipate or try to anticipate the effects of any nuclear tests.

Mr. Dalyell: Just wait until it happens.

Mr. Wood: I do not think that the hon. Gentleman wants to hear the answer. It would be even more wrong to anticipate the decision that the Western Samoan Government might reach on the basis of any effects that these tests had.

Uganda (Arms Supplies)

Mr. Douglas-Mann: asked the Secretary of State for Foreign and Commonwealth Affairs if he will raise at the United Nations, as a threat to world peace, the proposed supply of arms by France to the Government of Uganda.

Sir Alec Douglas-Home: No, Sir. We have been in touch with the French Government about Press reports on this subject and they have assured us these reports are without foundation.

Mr. Douglas-Mann: That report is extremely welcome, if it is accurate. Will the Foreign Secretary take the opportunity of asking his right hon. Friend the Prime Minister, when he confers with President Pompidou, to ask the French to ensure that no such supply takes place, because to supply arms in this context would be to drop a detonator into a powder keg?

Sir Alec Douglas-Home: I have myself made these representations to the French Government, and I have received this answer. I have no reason to believe that it is not accurate.

TRIDENT AIRCRAFT ACCIDENT (REPORT)

The Minister for Aerospace and Shipping (Mr. Michael Heseltine): The House will wish to know that the report of the public inquiry into the crash of the BEA Trident G-ARPI which occurred near Staines on 18th June shortly after taking off from London (Heathrow) is to be published today. The inquiry was a long and complicated one and I wish to pay tribute to the Commissioner, Mr. Justice Lane, and his two Assessors, Sir Morien Morgan and Captain Jessop, for the thoroughness of their inquiry and the valuable report which they have produced.
The court found that there were five immediate causes of the accident, namely—

(a) a failure by the handling pilot to achieve and maintain adequate speed after noise-abatement procedures;
(b) retraction of the droops at some 60 knots below the proper speed caus-

ing the aircraft to enter the stall régime;
(c) failure by the crew to monitor the speed error and to observe the movement of the droop lever;
(d) failure by the crew to diagnose the reason for the stick-pusher operation and the concomitant warnings;
(e) operation of the stall recovery override lever;

and seven underlying causes which with one exception are all concerned with human factors, including the medical conditions of Captain Key, the experience of Second Officer Keighley and the distraction of Second Officer Ticehurst, rather than mechanical deficiencies. The House will be glad to know that the inquiry found no fault with the Trident aircraft and indeed commented favourably on its safety record and reputation. The court acknowledges that the parties concerned have already taken steps to implement much of what is contained in its recommendations, many of which are matters for the Civil Aviation Authority. The House will, I am sure, wish to know what action is being taken in respect of these matters, and I am setting out these recommendations and the action already in hand to meet them in the OFFICIAL REPORT.

Mr. Mason: I echo the tribute which the Minister paid to the Commissioner and his Assessors. I think we are all pleased to learn that this excellent aircraft was not proved to be faulty.
There was some unfortunate and perhaps upsetting publicity during the public inquiry. I think it is best in the long term interests of all who are concerned with safe air travel that public inquiries should be held, especially after a major accident. I have one cautionary note. Perhaps the Minister will consider the possibility of improving the system, especially when technical examinations are necessary.
I wish to ask four specific questions. First, the uncovery of the droop baulk early in the flight was done partially to follow the noise abatement procedures. Since the accident, more power has been allowed so that the flap can be kept down for a longer period of time. The uncovery of the droop is therefore delayed and the stalling position avoided. In this


connection a more detailed study is required of the technical and environmental problems so that the right balance may be struck between flight safety and social considerations.
Secondly, will the Minister enlighten the House on the extent to which training procedures have changed?
Thirdly, in liaison with the CAA, cockpit voice recorders are being introduced specifically for accident purposes. The British Airline Pilots Association may have had some complaint in the past about privacy in the cockpit, but the association is not worried about voice recorders being used for accident purposes.
My fourth question is about pilot stress. Is it not possible to introduce a system of examination of pilots under physical stress for the purpose of achieving higher reliability in the detection of heart weakness?

Mr. Heseltine: The right hon. Gentleman has a serious point about the publicity surrounding public inquiries. I fully share his conclusion that it would be intolerable not to permit the holding of public inquiries. Until the report was published I did not think it right to discuss with Mr. Justice Lane his conclusions and observations. I have it in mind to hold such a conversation with him to discuss any peripheral changes he might have in mind but not a change in the basic system.
As to the uncovery of the droop baulk and the relevance of noise abatement procedures, the inquiry considered this point and came to the conclusion that the crew should have been able to carry out the noise abatement procedures perfectly satisfactorily. Hawker Siddeley Aviation has developed a baulk which is now being fitted to the BEA Trident, and that work will be completed as soon as possible.
The training procedures have been looked at both at the training establishments and within BEA by the CAA to alert pilots and crews to the specific problems thrown up by this accident.
The report deals with cockpit recorders and suggests that they should be made a mandatory requirement for all civil passenger aircraft of more than 27,000 kg.

all-up weight. The Air Navigation Order has been amended recently to require cockpit recorders to be installed by 1st January 1975 in many of the aircraft types used by British operators. We are considering whether it is possible to bring this matter any further forward, but it is a difficult and expensive operation and I am not over-optimistic that the date can be changed appreciably.
The report says that electrocardiac testing should be reviewed and that when the tests are more reliable consideration should be given to their introduction. At the moment they are not considered to be sufficiently reliable and the CAA accepts the recommendation to keep them under review. We do not intend to move over to such tests at the moment.

Mr. Michael McNair-Wilson: My hon. Friend will be aware that many people were concerned that the captain of the aircraft was nearly 30 years older than his second and third pilots. Has my hon. Friend had discussions with the BAB on the possibility of flight crews in future being more equally matched in age?

Mr. Heseltine: BEA has introduced a modification to the "brown line" system which provides that in addition to the captain one of the second officers shall have at least two years' experience as opposed to the one year which was the custom when this accident occurred.

Mr. David Steel: Does the Minister accept that the carrying out of noise abatement procedures involves extra complications for pilots in the critical period after taking off, and is any study being made of these procedures? Is the Minister satisfied that the incidents which pilots are required to report to their airlines ever go beyond the particular airline concerned?

Mr. Heseltine: The noise abatement procedures are, as I have said, dealt with in the report, and are considered to be within the reasonable capabilities of the crew. The CAA is to carry out an urgent review of the noise abatement procedures at Heathrow, Gatwick and Manchester for the purpose of considering the procedures in the context of the report. Before the accident occurred a change took place in the CAA general


set-up. A controller of safety was appointed to co-ordinate the two sides of the CAA—operating and airworthiness— and to ensure that information available to one side is translated to the other. BEA has appointed a responsible person who has the opportunity and the power to investigate all incidents. Since the accident, BEA has reviewed the procedures involved within the airline to be sure that they are working effectively.

Mr. Warren: I fear from my hon. Friend's statement that the real tragedy of the Trident accident is that it was predictable. Will my hon. Friend institute an immediate survey of all flight deck equipment and procedures on British registered civil aircraft to ensure that there is nothing else on the flight deck with built-in catastrophic failure characteristics, as we have witnessed with this accident? Secondly, will he institute immediately the mandatory public incident reporting procedures which are accepted in Australia and the United Slates as a major contribution to the high safety record of civil aircraft in those countries and about which there have been many years of discussion here and on which action should now be taken?

Mr. Heseltine: Certainly it appears from the report that the specific incidents which had a part to play in this accident were matters on which work was being done in the airlines and on which advice was about to be issued to pilots. To that extent, my hon. Friend's opening remarks are valuable. A very detailed review is constantly undertaken by the CAA into the two matters about which my hon. Friend has asked me. In the context of the authority's responsibilities I have no doubt that it keeps these matters before it continually.

Mr. Churchill: Will my hon. Friend see to it that the noise abatement procedures are speedily reconsidered in view of the fact that it is clear in this case that the aircraft in question would have been higher, faster and carrying more power had it not been for these procedures, which are very stringent at Heathrow? Will my hon. Friend also comment on the change in the climbout profiles from Heathrow of the Trident recently effected, and can he say whether it will be extended to other aircraft?

Mr. Heseltine: The noise abatement procedures were covered by the report. It was the view of the report that they were well within the capability of the existing crew, although an urgent review is being carried out by the CAA at the three airports most affected—Heathrow, Gatwick and Manchester. As for the new procedures which are being adopted for Tridents on the climb out of London Airport, this is being done because it enables wing-flaps not to be withdrawn, so allowing the baulk on the front droop to remain in position, and therefore giving total protection against this sort of situation up to speeds of 190 knots, after which the risks do not remain. But this is a phenomenon applicable only to the Trident. It would not have the same relevance to other aircraft types.

Mr. Dalyell: As a weekly user of Gatwick, may I ask the Minister what exactly the noise abatement study there is? Is it simply a matter of engine power? How soon will it be done?

Mr. Heseltine: The noise abatement procedures are a form of power reduction at certain heights to reduce noise. Obviously the safest and most simple way to get an aircraft off the ground is to give it full power and let it go straight up. But in order to balance that requirement with the environmental amelioration which one can get by reducing power at certain heights, there are noise abatement procedures. These are considered perfectly satisfactory within the framework of the examination conducted on them, but they are being looked at again by the CAA.

Mr. Tebbit: Does not my hon. Friend agree that this question and answer session could have been much more useful if hon. Members had had the opportunity to read the report before starting to question my hon. Friend about it? Will he assure me, as I understand from what he said, that one recommendation of the report was that cockpit voice recorders should be carried and that the date for their carriage should be brought forward? My hon. Friend will be aware that this is a matter that I have been urging on him for some time. I hope that my hon. Friend will not take too much notice of those who say that it cannot be done in time. It is done already in the United States. Finally, in order that there may


be a balance of comment about the report, can my hon. Friend say whether there is any recommendation about the conduct of the airline which one could reasonably have expected by now to have been acted upon but which has not yet been acted upon?

Mr. Heseltine: The normal procedures for making information of this kind available to hon. Members have been followed in this case. It would be very difficult to publish a report in advance which was then not widely available to the public at large at a time when the Minister responsible was not available to comment on it. That is the normal procedure. We have taken steps to publish the report as quickly as possible in the circumstances.
As for cockpit voice recorders, I accept the urgency which my hon. Friend gives to this matter, as do the airline and the CAA. They are doing what they can to bring forward the date already agreed upon, which is 1st January 1975. The fact that the practice has been adopted already in the United States is not a factor. It is not the equipment which is difficult. It is the time that it takes to fit it and the economic penalty of withdrawing aircraft from service while it is done. It is expensive and time consuming.
My hon. Friend asks whether anything could have been done earlier than has already been done. This is a subjective matter, and hon. Members will want to consider that when the report is before them. I do not take a dogmatic view about it. Along with the CAA and the airlines, I shall keep the matter constantly under review, and I shall respond to any advice, especially that of my hon. Friend the Member for Epping (Mr. Tebbit), where it appears that we are being dilatory. But I hope that that will not be necessary.

Following is the information:
The first recommendation relates to "the need" for a baulk to prevent premature retraction of the leading edge droops or slats. Hawker Siddeley has developed and the Authority has approved an air speed sensitive baulk. Manufacture of the equipment is well advanced, its installation in the BEA Trident fleet is expected to start next month, and their whole Trident fleet should be equipped within a year. In addition, a mandatory procedure has been introduced to prevent premature retraction of the droops.

The second recommendation deals with the need for instruction and training for pilots on the causes and results of "change of configuration" stalls; on the circumsances in which a stick-pusher and stick-shaker may operate almost simultaneously; and on the difference in design concept between stick-shaker and stick-pusher mechanisms.
The CAA accepts the importance of giving additional emphasis to these items during basic and conversion training and is taking action with the flying schools and airlines concerned. It is also investigating what is done in Australia, France, Germany and the USA about stall training.
The third recommendation proposes that the carriage of cockpit voice recorders should as soon as possible be made a mandatory requirement for all civil passenger-carrying aircraft of more than 27,000 kg all-up weight.
The CAA accepts this recommendation in principle and will immediately consult the airline industry about the practicability of an early date for the supply of the equipment and its installation in all the aircraft involved. BEA plans to meet this requirement are well advanced. The Air Navigation Order was recently amended to require cockpit voice recorders to be installed by January 1st 1975 in many of the aircraft types used by British operators.
The fourth recommendation deals with the need for pilots to be aware of the dangers of subtle as well as obvious pilot incapacitation. In the light of the evidence given during the Inquiry the Authority has already instructed its Flight Operations Inspectors to ensure that crew training and flight procedures take full account of the point now made in the recommendation.
The fifth recommendation proposes that young trainee pilots should be given additional experience, possibly as observers on the flight deck, before operating as P2 on passenger-carrying flights. The Authority is about to discuss this with the airlines.
The sixth recommendation which proposes that should the "stress test" electrocardiogram in future become significantly more reliable, it should be substituted for the present "resting" ECG, is accepted by the Authority. Meanwhile the Authority implemented on 1 March the ICAO requirement for more frequent ECGs for professional pilots. This is 2 years in advance of the date set by ICAO.
The seventh recommendation questions the desirability of allowing the P4 seat to be occupied during critical stages of flight by anyone except a person having a flight function to perform or under training. Occupation of a spare flight deck seat is already regulated by the airlines, but the Authority will consider further whether this, coupled with the complete discretion of aircraft commanders to refuse access to the flight deck, provides adequate safeguards.
The eighth recommendation concerns the stowing of the pilots' folding arm-rests on the Trident during the take-off, initial climb, approach and landing. As the report indicates, BEA have already introduced an appropriate


rule. The CAA's Flight Operations Inspectorate are examining other airline aircraft to see whether a similar change is needed.
The ninth recommendation suggests that BEA should consider giving their Air Safety Officer greater authority to investigate potentially dangerous incidents. I understand from BEA that there is no limit on his authority to investigate such incidents. Since the Inquiry BEA has carefully reviewed the whole system including the organisation, staffing and procedures of its Air Safety Branch.
The final recommendation suggests that the CAA should encourage closer co-operation between its operational and airworthiness branches. I understand that in the past year the Authority has brought about close cooperation between these two complementary Divisions, under the Controller Safety, to whom both Divisions report.
Although the report makes no recommendation in respect of noise abatement procedures, and there appears to the CAA to be no evidence to cause doubt about the adequacy of safety margins, the Authority is nevertheless instituting a review of all safety aspects of noise abatement procedures.

BILL PRESENTED

BAHAMAS INDEPENDENCE

Secretary Sir Alec Douglas-Home, supported by Mr. Secretary Carr, Mr. Secretary Walker, Lord Balniel, Mr. David Lane, and Mr. Anthony Kershaw presented a Bill to make provision for, and in connection with, the attainment by the Bahamas of fully responsible status within the Commonwealth: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 129.]

WORKS COUNCILS BILL

3.45 p.m.

Mr. David Steel: I beg to move,
That leave be given to bring in a Bill to make the establishment of works councils, assemblies of employees and departmental meetings compulsory in all employment; and to give works councils co-decision making powers in areas particularly affecting employees and the right to be properly informed of company plans and progress.
I seek leave to introduce this Bill against a background of an escalation of industrial strife. In the first half of the 1960s, in an average year we lost about 2·5 million working days through industrial disruption. In 1968 that went up to 4·5 million working days lost. In 1971 it went up to 13·5 million days. The suggestion is that once the figures for 1972 are available it will be shown that the country lost the staggering number of 24 million working days through industrial strife. The only other country in Europe which has as bad a record is Italy, which, like us, has no works council legislation on its Statute Book. Several of our new European partners, notably Holland, France and West Germany, have such legislation, and the climate of industrial relations in those countries is vastly better and healthier than it is here.
I believe that it is timeous to introduce such a Bill at this stage when the European Commission is itself considering the framework of a European company code and recommending to member States an examination of the German company legislation.
Against the background of the failure of the Industrial Relations Act—an Act which even the Government are coming to regard as a dead letter—it is necessary to bring about a better climate of industrial relations. I believe that the country is sick and tired both of the confrontation between the Government and the trade unions and of that which exists at industrial level between employers and employees. Therefore, my first submission is that against a background of that sort my Bill is highly relevant.
The Bill would propose to establish by law a works council in every company with more than 20 employees. Moreover, it would require in every works where


there were more than 50 persons employed the holding of regular departmental meetings to discuss the organisation of work in any plant. It would impose an obligation on employers to give the necessary time for those elected to works councils to pursue their statutory activities. The Bill would empower the appropriate Minister to establish industrial boards to supervise the setting up of works councils and to give advice in so doing.
The functions of the works councils would be extremely important and would be defined in the Bill. We would require them to consult and co-operate with management on such matters as job evaluation, wage structures and piece rates. We would give them responsibility for consultation with management on such matters as working times, holidays and overtime arrangements.
In other words, they would not be the sort of works councils we have in some firms which are merely glorified canteen committees. There would, by reciprocal arrangements, be a duty on employers to consult the works councils particularly on such matters relevant to today's economy as takeovers, mergers and redundancies, matters on which at the moment they may be all manner of consultations or none at all, but at any rate very little with those who work in the firms concerned and whose fates are directly affected.
I believe that there is evidence of a growing national interest in the whole

subject of worker participation, an interest shown not only in the Press and the academic world but even in the Labour and Conservative Parties. It is my belief that sooner or later we shall have legislation roughly along these lines. It is therefore right that we should at any rate provide some service in bringing forward detailed proposals for publication, should the House decide to give leave.
These proposals are designed to bring about a far greater level of job satisfaction, which is at present missing from so much of our industrial life, to replace confrontation with participation and so at the end of the day to help increase productivity to the benefit of the economy and the country.

Question put and agreed to.

Bill ordered to be brought in by Mr. David Steel, Mr. J. Grimond, Mr. Emlyn Hooson, Mr. John Pardoe and Mr. Graham Tope.

WORKS COUNCILS

Bill to make the establishment of works councils, assemblies of employees and departmental meetings compulsory in all employment; and to give works councils co-decision making powers in areas particularly affecting employees and the right to be properly informed of company plans and progress, presented accordingly, and read the First time; and ordered to be read a Second time upon Friday 22nd June, and to be printed. [Bill 132.]

Orders of the Day — SOCIAL SECURITY BILL

As amended (in the Standing Committee), further considered.

Clause 3

CLASS 2 CONTRIBUTIONS

3.52 p.m.

Mr. Brian O'Malley: I beg to move Amendment No. 7, in page 5, line 36, leave out '£1·68' and insert '£100'.
It is right that before we conclude the Report stage we should at least spend some time examining the problem of the numerically smaller class of contributors, those who are self-employed and who under the terms of the Bill will pay flat-rate Class 2 contributions and also be liable for a 5 per cent. levy on income exceeding £1,150 a year on their Schedule D earnings up to a ceiling of £2,500.
The House should first bear in mind that large numbers of the self-employed have small incomes. It is against that background that we should examine the financial obligations placed upon this category of contributors. It is a regrettable fact, which is generally accepted, that successive Governments have found it impossible to bring self-employed earners into an earnings-related system. Because of the continuing dependence on flat-rate contributions substantial numbers of self-employed persons with small incomes suffer from the same disadvantages inherent in a system of flat-rate contributions as are suffered by lower-paid workers who pay Class 1 contributions.
It is worth noticing that under the terms of the Bill a self-employed earner liable for Class 2 contributions with a weekly income on the Schedule D returns of £20 a week will be making a percentage contribution to the national insurance fund not of 5·25 per cent., which is the percentage paid by the employer, but of 8 per cent. Another example is that of a woman paying Class 2 contributions. Even under the transitional arrangements, when she will be paying a weekly con-

tribution of £1·40, she will be paying a flat-rate contribution equal to 10 per cent. of her total income.
I am not considering the fact that a self-employed earner has no employer to make a contribution. I am merely looking at the stark facts as they face such a person. Unlike a Class 1 contributor he is expected to make a percentage contribution much higher than that of employed persons even though a large number of self-employed persons have limited incomes. When such people take the option and make voluntary contributions to maintain a contribution record to obtain a full retirement pension they are required to pay what must to many be a near crushing burden.
As the Bill stands, whereas self-employed persons paying a Class 2 contribution will be required to pay £1·68 in the case of a man and £1·40 in the case of a woman, under the transitional proceedings those whose income is likely to be very small are required to make a payment of £1·33. This is not a party political point, it is part of the structure. This was inherited from the existing national insurance system. Since we are dealing with a major piece of principal legislation it is right that we should look at the problems arising for the self-employed person with a low income. We should also consider others, for example the single woman deprived of her job, looking after her elderly parents or sick members of her family.
The purpose of this amendment is to bring relief to those who have the option of making voluntary contributions and to attempt to give some assistance to self-employed persons, many of whom have limited incomes and who are, in overall terms, among the lower-paid. The effect of the amendment is not to bring in any additional resources from payments made by self-employed contributors.
The global effect of the amendment would mean that the whole body of self-employed persons would be making a global contribution at about the same level as now. There could be a debate about whether the proportion of contributions as between self-employed and employed persons is right. The Undersecretary pointed out in Committee that whereas the sum of the self-employed person's contribution relates to only 33


per cent. of the retirement pension, as a result of the Bill this group will find that they are contributing not 33 per cent. but 53 per cent. towards the cost of the pension.
We are not discussing that now. We are not discussing the overall basic amount of money to be raised by self-employed persons through their contributions. What I am trying to do is suggest a formula which will bring relief to self-employed earners and to those who find themselves in a position when it could be to their advantage to make voluntary contributions to maintain a contribution record even if their total income is very small.
4.0 p.m.
We are not tied to this precise formula. If the Government wanted to raise more money from self-employed contributors we would be prepared to listen to any propositions they might wish to put forward. If they said that we had the balance of the arithmetic wrong and that the figures should be amended, we are flexible on this matter and would be prepared to listen.
Against that background I will briefly describe the effect of the amendments. The effect of Amendment No. 7 would be to reduce the Class 2 contribution for the self-employed, of whom large numbers are on very small incomes, from £1·68 to £1. Similarly, those paying voluntary contributions—we must consider these people with a great deal of sympathy —would be required to pay not £1·33, as stipulated in the Bill, but £1.
In order to balance the revenue brought into the National Insurance Fund we propose in Amendment No. 9 that the percentage contribution from those with incomes ranging from £1,150 to £2,500 a year should be raised from 5 per cent. to 1½ per cent. and from those earning over £2,500 a year 10 per cent.
There are about 1½ million self-employed persons in the United Kingdom. On the most reliable figures that I have, I understand that about two-thirds of those 1½ million self-employed have earnings at or below £1,150 per year. Even those on £1,150 are expected to make an 8 per cent. date-rate payment.
The amendments would be particularly helpful to the self-employed with limited

incomes. They would find themselves advantaged up to a sum of 68p.
There would be little or no additional cost imposed on the self-employed with incomes of between £1,150 and £2,500. For example, a self-employed person with an income of £2,500—the ceiling laid down in Clause 5—would be liable to a percentage levy of 5 per cent. on £1,350, the difference between £1,150 and £2,500, and there would be a total levy of £2·98 —£1·68 for the Class 2 contribution, plus £1·30 as the 5 per cent. contribution under Clause 5.
Under my revised formula the total payments made, assuming a drop in the Class 2 contribution from £168 to £1 and a 7½ per cent. levy rather than a 5 per cent. levy, would be £1·95 on the levy and £1 for the contribution. So, even at the ceiling, the £2,500-a-year man would be paying not £2·98, but £2·95. Therefore, we are not loading additional burdens on the self-employed whose incomes are modest or up to one-and-a-half times national average earnings. We are particularly anxious to do what we can to help the self-employed with modest incomes, but we suggest that a possible formula might be that which we are proposing. It would mean that even persons earning up to one-and-a-half times national average earnings would not find themselves loaded with additional payments.
I understand that the total resources coming into the National Insurance Fund, under the system laid down in the Bill, would be about £132 million a year. Under our proposals the figure would be about the same. I cannot put it any nearer. The Opposition do not have the advantage of the research facilities available to the Government within major Departments.
There is room for argument about what should be the proper percentage contribution for pensions return which the self-employed should receive. If the Government believe that there is any need for a further upward revision, having moved from 33 per cent. to 53 per cent., which is a helfy increase, we would be prepared to look at any proposal they may make. However, we believe that our proposals provide a formula which could help the self-employed person with a small income.
It is right that this House should look at the problems of the small shopkeeper —the lady with the little corner shop who is faced with competition by supermarkets, hypermarkets, and the great chain stores—and all the self-employed who find that there is no gold mine at the end of the day and that they are working for an extremely limited income. It seems reasonable to put forward these proposals in order to give some assistance to the poorer of this section of the community whose needs, because they number only 1½ million rather than many millions, are often overlooked when we discuss general matters in this House.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): The hon. Member for Rotherham (Mr. O'Malley) said that it is never easy to fit the self-employed into the national insurance scheme and to see that, on the one hand, the burden of contributions is not too great for them, given their circumstances, and that, on the other hand, they bear a fair share of the cost of the basic scheme. This is an age-old problem which is not made any easier under the new arrangements.
I remind the House that we are speaking about 1½ million self-employed people who pay contributions, of whom about 1 million will be paying the Class 4 contribution in addition to the Class 2 contribution.
It is difficult to get a fair balance for the self-employed. First, there is only one contributor to the scheme—the self-employed person. Secondly, there is a great variety of earnings and profits levels among the self-employed. They range from the small shopkeeper, at one end of the scale, to, perhaps, lawyers, some of whom have substantial earnings, at the other.
Another factor which has to be taken into account is that if the total contribution coming from the self-employed into the scheme is substantially less than the total coming in from the employed— from the employer and the employee— there is a temptation for artificial self-employment to be created. Indeed, there can be a real incentive on the part not only of the employee but of the employer to create such artificial arrangements. We have seen this in a number of industries and over many years it has

created serious problems. Therefore, we must try to balance this variety of factors in assessing what the self-employed should pay.
What we are proposing in the Bill for Class 2 contributions is something almost parallel with or similar to the arrangements which now exist. We are proposing that the level for the flat-rate contribution should be similar to that which applies now and that the ratio between what the self-employed and the employed pay should be broadly maintained.
That is the position from which we start. I freely admit that it is a matter of judgment whether this is correct, but we did not see any good reason for departing from, broadly, the position which exists at present.
The hon. Member very rightly drew attention to the difficulties which this can create, particularly for the self-employed person on a very low income. It is a difficulty which of course exists in the present scheme. One of the ways in which we tried to meet it, both under the existing arrangements and in Clause 3 of the Bill, is to provide a safeguard so that the self-employed will not have to pay a compulsory contribution when his earnings are below a certain level. In effect, we are making the Class 2 contribution voluntary where earnings are less than £9 a week. This means that the cover for the self-employed for pensions is not available when they are not making contributions, but we are continuing the arrangement which existed previously for those for whom paying the contribution would be a hardship.
We are continuing the flat-rate contribution—but not because we think that is desirable. In an ideal situation we would much have preferred to move over to an earnings-related position, but we have not yet been able—in view of the ways in which self-employed operate and the way in which their taxation arrangements are made—to devise a way in which they could pay the earnings-related contributions. So we have to maintain the system. I think it fair to say, having conceded the disadvantages which exist in a flat-rate system of contribution, that we have to be very careful that the self-employed are not bearing less than their fair share of the pay-as-you-go scheme because of


the temptations which otherwise would arise.
To illustrate the inherent dangers, if we go back to the beginning of the present scheme in 1948 we find that from that time the self-employed has paid a steadily smaller share of the cost of pensions and other benefits. It was 69 per cent. of the maximum Class 1 contribution in 1948, but it was only 33 per cent. of such a contribution in 1972. There has been a very substantial drop in the proportionate share of the burden borne by the self-employed. For this reason we have tried to avoid, on the one hand, the low-paid self-employed having an unreasonable burden put on him while, at the same time, asking the higher-paid self-employed contributor to pay a larger share through the Class 4 contribution.

Mr. O'Malley: The hon. Gentleman says that the Government have tried to avoid a lower-paid self-employed earner bearing an intolerable burden as a result of the system of flat-rate contributions. Does he not think that in the example which I quoted of a self-employed woman receiving £15 a week and paying 10 per cent. of her income there is an intolerable burden?

4.15 p.m.

Mr. Dean: Inevitably in a flat-rate contribution the lower the earnings the higher proportion does the contribution bear to those earnings. This is an inevitable part of the arrangement. We are deliberately not increasing the burden of the self-employed under the new arrangements in spite of the fact that their share of the cost of the scheme has reduced fairly substantially over the years. In order that the higher-paid self-employed shall bear an additional share of the cost of the basic scheme, we have introduced the concept of the Class 4 contribution.
I accept that, as the hon. Member said, it is a matter of judgment where to draw the balance between these two categories of contributors. If we take the combination of the Class 2 and the Class 4 contributions, we have aimed not to put too big an additional cost on to the self-employed who will be paying this new contribution for the first time. The new Class 4 contribution—which, incidentally, will apply only to profits and gains above

£1,150—partly redresses the balance, but the maximum contribution paid by a self-employed person with profits and gains of £2,500 or more is still only 53 per cent. of the total Class 1 contribution on equivalent earnings.
The hon. Member may think that in giving those figures I am making a comment in favour of the proposals he has made. One has to recognise that this is a new contribution. It is a burden that the self-employed are not bearing at present and substantially to increase the contribution at the higher end, which is what the hon. Member's proposal amounts to, would bring them to the highest rate of tax, to 85 per cent. This is a substantial, almost a penal, rate to expect the self-employed to bear. I therefore suggest that we have got the right balance here between the flat-rate contribution and the earnings-related contribution which will be paid by those self-employed who have profits and gains above a certain level. But this is a matter of judgment and it is a factor which can always be changed in future if in the light of experience that seems appropriate.

Dame Irene Ward: I listened with very great care to what my hon. Friend the Under-Secretary said. As I think he knows, I have always taken a great interest in people engaged in self-employment in a small way. I am always anxious that we should be as fair as possible under the circumstances which have been so ably and fairly outlined by my hon. Friend.
It is obvious that this is a very difficult position. As my hon. Friend said, the decision taken by the Government is a matter of judgment. I certainly would not be in any position to contradict or even to add anything to what he said, but one thing he said has given me quite a lot of hope. When introducing an enormous Bill of this kind from which an immense number of situations can arise, one realises that it must take a considerable time before one can see whether matters of judgment have been exercised in the right direction. One cannot decide early whether the judgment is good, indifferent or bad. All I know is that on a matter of this kind my hon. Friend will have tried to make the very best judgment he can in the interests of the people whom he, just as other


hon. Members on both sides of the House, is anxious to look after.
My hon. Friend gave me a little hope when he referred to the matter of judgment and whether it was correct. I have not received any representation from people in a small way of business whose position we are discussing. I am very close to my constituents, and as a rule they let me know whether they approve of what Governments are doing, but I have had no representations on this matter. Since it is so complicated, it will take them some time to understand all the decisions which are embodied in the Bill on their behalf and to see whether they will face too heavy a burden or whether their position is being properly protected.
What encouraged me in my hon. Friend's speech was that he said that, when everyone concerned has been able to assess this judgment, there will be an opportunity in future years to alter these decisions, if necessary. My experience in political life is that, when something is discovered to be wrong, it is the most difficult thing for any Government to find time to correct it. This is a very important matter, so I am grateful for the Minister's comment.
I cannot make any helpful observations because of my lack of knowledge of this subject, but I am glad that my hon. Friend's speech will be on the record. Whenever this matter is being re-examined, if it turns out that the judgment has not been right, I hope that my right hon. Friend will find Government time to readjust it. That is the best thing that we can do. If he says anything else, I hope that he will re-emphasise that, if there are difficulties for these people, there will be an early opportunity to readjust the position and to give them fairer treatment.

Mr. O'Malley: With leave of the House——

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Perhaps I should remind the House that there is no need to ask for permission to reply. Any hon. Member in charge of an amendment, from whatever part of the House, has an absolute right of reply. The same applies to the Government in answering.

Mr. O'Malley: I am grateful, Mr. Deputy Speaker.
The hon. Member for Tynemouth (Dame Irene Ward) accepted that the Government had made a judgment but were prepared to keep their minds open. What has happened is rather different. The Government have taken over part of the existing scheme, without fully considering the inherent disadvantages.
The Under-Secretary said that the Government did not want to provide incentives for artificial self-employment. That sounds a bit odd coming from this Government, with their history of the treatment of the "lump" in the building industry. When they came to office, they found a ready-defined solution waiting on a plate but chose to ignore it. A characteristic of their period in office has been the growth of bogus self-employment which this Department resolutely refused to do anything about in Committee.
The Under-Secretary says, in those courteous tones, that it is a matter of judgment and that the Government will consider all these things, but nothing ever happens. This is my fear about the Bill. I agree that we should not put too big a burden on Class 4 contributors. That is why one of our amendments would have provided that these contributors, up to earnings of £2,500 a year, would pay no more—in fact, marginally less—than under the Bill as drafted.
How can anyone defend a situation in which self-employed people are asked to bear contribution levels which are such high percentages of their income as I have described? If we were going to deal with this problem for the lower-paid employed people by the introduction of earnings-related contributions but could not introduce earnings-related contributions for the self-employed, we should have sought some formula to give the lower-paid self-employed these advantages in some other way.
Therefore, in the present economic circumstances and the general context of the Government's policies, with ail their hand-outs to the wealthiest sections of the community—

Dame Irene Ward: Rubbish.

Mr. O'Malley: The hon. Lady has obviously not been listening to our debates


over the past 18 months, which show that money has been shovelled out by the bucketful to those at the top of the income ladder.
Therefore, in the circumstances, we on this side remain profoundly dissatisfied with the way in which the Government

have decided to treat—in fact, to neglect —the self-employed on low incomes. That is why I recommend my hon. Friends to vote for the amendment.

Question put, That the amendment be made: —

The House divided: Ayes 171, Noes 190.

Division No. 128.]
AYES
[4.27 p.m.


Ashton, Joe
Grant, George (Morpeth)
Oram, Bert


Atkinson, Norman
Grant, John D. (Islington, E.)
Orbach, Maurice


Barnes, Michael
Grimond, Rt. Hn. J.
Orme, Stanley


Barnett, Guy (Greenwich)
Hamilton, James (Bothwell)
Oswald, Thomas


Barnett, Joel (Heywood and Royton)
Hamilton, William (File, W.)
Owen, Dr. David (Plymouth, Sulton)


Baxter, William
Hamling, William
Padley, Walter


Beaney, Alan
Hardy, Peter
Pannell, Rt. Hn. Charles


Benn, Rt. Hn. Anthony Wedgwood
Harper, Joseph
Pardoe, John


Bennett, James(Glasgow, Bridgeton)
Harrison, Walter (Wakefield)
Pavitt, Laurie


Bishop, E. S.
Hart, Rt. Hn. Judith
Peart, Rt. Hn. Fred.


Blenkinsop, Arthur
Hattersley, Roy
Perry, Ernest G.


Booth, Albert
Healey, Rt. Hn. Denis
Prentice, Rt. Hn. Peg.


Boyden, James (Bishop Auckland)
Houghton, Rt. Hn. Douglas
Price, William (Rugby)


Bradley, Tom
Hughes, Mark (Durham)
Radice, Giles


Brown, Hugh D. (G'gow, Provan)
Hughes, Robert (Aberdeen. N.)
Reed, D. (Sedgefield)


Buchan, Norman
Janner, Greville
Roberts, Rt. Hn.Goronwy(Caernarvon)


Buchanan, Richard (G'gow, Sp'burn) 
Jenkins, Hugh (Putney)
Roderick, Caerwyn E.(Brc'n&amp;R'dnor)


Callaghan, Rt. Hn. James
Jenkins, Rt. Hn. Roy (Stechford)
Ross, Rt. Hn. William (Kilmarnock)


Campbell, I. (Dunbartonshire, W.)
John Brynmor
Rowlands, Ted


Carmichael, Neil
Johnson, Walter (Derby, S.)
Sandelson, Neville


Carter, Ray (Birmingh'm, Northfield)
Jones, Dan (Burnley)
Sheldon, Robert (Ashton-under-Lyne)


Castle, Rt. Hn. Barbara
Jones Rt. Hn.Sir E!wyn(W.Ham,S.)
Shore, Rt. Hn. Peter(Stepney)


Clark, David (Colne Valley)
Jones, Gwynoro (Carmarthen)
Short,Rt.Hn.Edward(N'c'tle-u-Tyne)


Coleman, Donald
Jones, T. Alec (Rhondda, W.)
Short, Mrs. Renée (W'hampton,N.E.)


Concannon, J. D.
Kaufman Gerald
Silkin, Rt. Hn. John (Dept(ord)


Conlan, Bernard
Kelley Richard
Silkin, Hn. S. C. (Dulwich)


Cox, Thomas (Wandsworth, C.)
Lamborn Harry
Silverman, Julius


Crosland, Rt. Hn. Anthony
Lamond James
Skinner, Dennis


Cunningham, G. (Islington, S.W.)
Latham Arthur
Small, William


Cunningham, Dr. J. A. (Whitehaven)
Lawson' George
Spriggs, Leslie


Dalyell, Tarn
Lee, Rt. Hn. Frederick
Stewart, Rt. Hn. Michael (Fulham)


Davies, Denzil (Llanelly)
Leonard Dick
Strang, Gavin


Davies, G. Elfed (Rhondda, E.)
Lipton, Marcus
Strauss, Rt. Hn. G. R.


Davies, Ifor (Gower)
McBride Neil
Summer-skill, Hn. Dr. Shirley


Davis, Clinton (Hackney, C.)
McElhone, Frank
Swain, Thomas


Davis, Terry (Bromsgrove)
Machin, George
Thorpe, Rt. Hn. Jeremy


de Freitas, Rt. Hn. Sir Geottrey
Mackenzie, Gregor
Tope, Graham


Delargy, Hugh
Mackintosh, John P.
Torney, Tom


Dell, Rt. Hn. Edmund
Maclennan, Robert
Varley, Eric G.


Doig, Peter
McMillan, Tom (Glasgow, C.)
Wainwright, Edwin


Dormand, J. D.
McNamara, J. Kevin
Walker, Harold (Doncaster)


Douglas, Dick (Stirlingshire, E.)
Marks, Kenneth
Wallace, George


Douglas-Mann, Bruce
Marquand, David
Watkins, David


Driberg, Tom
arshall, Dr. Edmund
Weitzman, David


Duffy, A. E. P.
Mason, Rt. Hn. Roy
White, James (Glasgow, Pollok)


Dunnett, Jack
Mayhew, Christopher
Whitehead, Phillip


Edelman, Maurice
Meacher, Michael
Whitlock, William


Edwards, Robert (Bllston)
Mellish, Rt. Hn. Robert
Willey, Rt. Hn. Frederick


Edwards, William (Merioneth)
Mendelson, John
Williams, Alan (Swansea, W.)


Ewing, Harry
Mikardo, Ian
Williams, Mrs. Shirley (Hitchln)


Faulds, Andrew
Millan, Bruce
Williams, W. T. (Warrington)


Fernyhough, Rt. Hn. E.
Mitchell, R. C. (S'hampton, Itchen) 
Wilson, Alexander (Hamilton)


Fitch, Alan (Wigan)
Morgan, Elystan (Cardiganshire)
Wilson, Rt. Hn. Harold (Huyton)


Fletcher, Ted (Darlington)
Morris, Alfred (Wythenshawe)
Woof, Robert


Foot, Michael
Morris, Charles R. (Openshaw)



Ford, Ben
Moyle, Roland
TELLERS FOR THE AYES:


Galpern, Sir Myer
O'Halloran, Michael
Mr. Tom Pendry and


Gilbert, Dr. John
O'Malley, Brian
Mr. James A. Dunn.


Glnsburg, David (Dewabury)






NOES


Adley, Robert
Barber, Rt. Hn. Anthony
Boardman, Tom (Leicester, S.W.)


Allason, James (Hemel Hempstead)
Bell, Ronald
Boscawen, Hn. Robert


Amery, Rt. Hn. Julian
Bennett, Dr. Reginald (Gosport)
Bossom, Sir Clive


Atkins, Humphrey
Benyon, W.
Braine, Sir Bernard


Baker, Kenneth (St. Marylebone)
Biffen, John
Bray, Ronald


Baker, W. H. K. (Banff)
Biggs-Davison, John
Brocklebank-Fowler, Christopher




Brown, Sir Edward (Bath)
Howell, David (Guildford)
Prior, Rt. Hn. J. M. L.


Bruce-Gardyne, J.
Howell, Ralph (Norfolk, N.)
Pym, Rt. Hn. Francis


Bryan, Sir Paul
Hunt, John
Raison, Timothy


Bullus, Sir Eric
Hutchison, Michael Clark
Redmond, Robert


Butler, Adam (Bosworth)
James, David
Rees, Peter (Dover)


Campbell, Rt.Hn.G.(Moray &amp; Nairn)
Jenkin, Patrick (Woodford)
Rhys Williams, Sir Brandon


Channon, Paul
Jessel, Toby
Ridley, Hn. Nicholas


Chapman, Sydney
Johnson Smith, G. (E. Grinstead)
Ridsdale, Julian


Chichesier-Clark, R.
Jopling, Michael
Rippon, Rt. Hn. Geoffrey


Clark, William (Surrey, E.)
Joseph, Rt. Hn. Sir Keith
Roberts, Michael (Cardiff, N.)


Cockeram, Eric
Kellett-Bowman, Mrs. Elaine
Roberts, Wyn (Conway)


Cooke, Robert
Kimball, Marcus
Rossi, Hugh (Hornsey)


Coombs, Derek
King, Evelyn (Dorset, S.)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Corfield, Rt. Hn. Sir Frederick
King, Tom (Bridgwater)
Shelton, William (Clapham)


Cormack, Patrick
Kinsey J. R.
Shersby, Michael


Costain, A. P.
Knox, David
Skeet, T. H. H.


Critchley, Julian
Lamont, Norman
Soref, Harold


d'Avigdor-Goldsmid, Sir Henry
Lane, David
Speed, Keith


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Le Marchant, Spencer
Spence, John


Dean, Paul
Lewis, Kenneth (Rutland)
Sproat, lain


Dixon, Piers
Lloyd, Ian (P'tsm'th, Langslone)
Stewart-Smith. Geoffrey (Belper)


Drayson, G. B.
Longden, Sir Gilbert
Stodart, Anthony (Edinburgh, W.)


Dykes, Hugh
Loveridge, John
Stoddart-Scott, Col. Sir M.


Edwards, Nicholas (Pembroke)
Luce, R. N.
Stuttaford, Dr. Tom


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
McAdden, Sir Stephen
Sutcliffe, John


Eyre, Reginald
MacArthur, Ian
Taylor, Edward M.(G'gow,Cathcart)


Farr, John
McCrindle, R. A.
Taylor, Frank (Moss Side)


Fell, Anthony
McLaren, Martin
Taylor, Robert (Croydon, N.W.)


Finsberg Geoffrey (Hampstead)
Maclean, Sir Fitzroy
Tebbit Norman


Fisher, Nigel (Surblton)
McNair-Wilson, Michael
Temple, John M.


Fletcher-Cooke, Charles
Madel, David
Thatcher, Rt. Hn. Mrs. Margaret


Fortescue, Tim
Maginnis, John E.
Thomas, John Stradling (Monmouth)


Fowler, Norman
Mather, Carol
Thomas Rt. Hn. Peter (Hendon, S.)


Fox, Marcus
Maude, Angus
Trew Peter


Gardner Edward
Mawby, Ray
Tugendhat, Christopher



Maxwell-Hyslop, R. J.
Turton, Rt. Hn. Sir Robin


Gibson-Watt, David
Meyer, sir Anthony
van Straubenzee, W. R.


Gilmour, Sir John (Fife, E.)
Mills, Stratton (Belfast, N.)
Vickers, Dame [...]oan


Glyn, Dr. Alan
Mitchell, David (Basingstoke)
Waddington, David


Godber Rt. Hn. J. B.
Molyneaux, James
Walder, David (Clitheroe)


Gower, Raymond
Monks, Mrs. Connie
Ward, Dame Irene


Grant, Anthony (Harrow, C.)
Monro, Hector
Warren, Kenneth


Gray, Hamish
More, Jasper
Weatherill, Bernard


Green, Alan
Morgan, Geraint (Denbigh)
Wells, John (Maidstone)


Grieve, Percy
Morrison, Charles
White, Roger (Gravesend)


Grylls, Michael
Mudd, David
Wiggin, Jerry


Gummer, J. Selwyn
Murton, Oscar
Wilkinson John


Gurden, Harold
Neave, Airey
Winterton, Nicholas


Hall, John (Wycombe)
Nott, John
Wolrige-Gordon, Patrick


Hannam, John (Exeter)
Oppenheim Mrs. Sally
Wood, Rt. Hn. Richard


Harrison, Col. Sir Harwood (Eye)
Orr, Capt. L P. S.
Woodhouse, Hn. Christopher


Haselhurst, Alan
Osborn, John
Woodnutt Mark


Hawkins, Paul
Owen, Idris (Stockport, N.)
Worsley Marcus


Hayhoe, Barney
Page, Rt. Hn Graham (Crosby)
Younger, Hn. George


Hiley, Joseph
Page, John (Harrow, W.)



Holland, Philip
Perclval, Ian
TELLERS FOR THE NOES:


Hornby, Richard
Peyton, Rt. Hn. John
Mr. Kenneth Clarke and


Hornsby-Smith, Rt. Hn. Dame Patricia
 Powell, Rt. Hn J. Enoch
Mr. Victor Goodhew.


Howe, Rt. Hn. Sir Geoffrey
Price, David (Eastleigh)

Question accordingly negatived.

Clause 5

CLASS 4 CONTRIBUTIONS

4.30 p.m.

Mr. Dean: I beg to move Amendment No. 11, in page 8, line 9, after 'effect', insert:
'without prejudice to the foregoing provisions of this subsection)'.
Perhaps with this amendment I should explain Amendments No. 116, 118 and 120. These amendments, in addition to the amendment we are now discussing,

Amendment No. 11, are technical amendments to clarify the general structure of Clause 5 and the accompanying Schedule 2.

Amendment agreed to.

Mr. Dean: I beg to move Amendment No. 12, in page 8, line 15, leave out 'them' and insert 'the Inland Revenue'.
This is a drafting amendment.

Amendment agreed to.

Mr, Dean: I beg to move Amendment No. 13, in, page 8, line 17, at end insert:
'(4A) So much of any money received by the Secretary of State under subsection (4) above as is estimated by him, in accordance


with any directions of the Treasury, to represent Class 4 contributions collected from persons in Northern Ireland shall be paid over by him to the Northern Ireland Ministry and be treated as contributions collected by that Ministry for the purposes of the basic scheme as it operates in Northern Ireland'.
The amendment is necessary because Class 4 contributions collected by the Inland Revenue are collected for the United Kingdom as a whole and have to be allocated as between Great Britain and Northern Ireland. The method of allocation is the normal one provided in the Bill for financial apportionment, that is, on an estimated basis in accordance with any directions of the Treasury.

Amendment agreed to.

Clause 7

ANNUAL REVIEW OF CONTRIBUTIONS

Mr. Dean: I beg to move Amendment No. 14, in page 11, leave out lines 27 to 30 and insert:
'and, where he determine not to lay a draft order, he shall with the report laid before Parliament under subsection (6) above lay a copy of a report by the Government Actuary on the consequences for the Fund which may, in the Actuary's opinion, follow from that determination'.
The amendment fulfils a promise given in Committee. In replying to Opposition amendments about Government Actuary reports on annual reviews of contributions, on behalf of the Government I accepted the principle underlying the amendments and undertook that, as their drafting was defective, the Government would move their own amendments on Report.
Under the Bill as it stands, the Secretary of State has to lay a Government Actuary report when he lays a draft order proposing changes following his annual review of contributions. He would not, however, have to lay a Government Actuary report if in a particular year he proposed no contribution changes but simply to report under Clause 7(6) giving his reasons why no changes would be necessary.
The amendment alters this position so that a Government Actuary report is required in these circumstances. In practice the contributions and benefits aspects of an uprating cannot be viewed

separately, and it seems likely that the normal practice will be for the Government Actuary to make a report on the uprating as a whole, whether or not contribution changes are proposed.
Nonetheless, the Government accept that, as the Bill deals separately with contributions and with benefits, there should be a specific requirement for a Government Actuary report to cover the situation where no contribution changes are proposed.
Amendment No. 41 makes a corresponding amendment to Clause 38 about annual review of benefits. We are grateful to the Opposition for the suggestion that they have made, and perhaps I will do as I did in Committee and welcome them as the joint authors of the Bill.

Amendment agreed to.

Clause 10

UNEMPLOYMENT BENEFIT AND SICKNESS BENEFIT

Mr. Dean: I beg to move Amendment No. 15, in page 17, line 3, leave out from beginning to 'below' in line 4 and insert:
'10.—(1) Subject to the provisions of this section, a person who satisfies any of the three conditions of subsection (2)'.

Mr. Deputy Speaker: I understand that it is convenient to discuss at the same time Amendments Nos. 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39 and 109.

Mr. Dean: This amendment and the large group of amendments to be discussed with it are technical amendments which fall into three groups. Their purpose is threefold; first, to simplify and make more intelligible the structure of Clause 10, as was done in Committee, on parallel provisions of Clause 11; secondly, to ensure complete consistency between the wording of parallel provisions in Clauses 10 and 11; and, thirdly, to bring out more clearly on the face of the Bill the way in which increments to retirement pension are to be calculated under Clauses 24 and 25.

Amendment agreed to.

Amendments made: No. 16, in page 17, line 10, leave out from beginning to 'Unemployment' in line 16 and insert:
'(2) The conditions of this subsection are that—

(a) the person is under pensionable age on the day in question and satisfies the contribution conditions specified for unemployment or. as the case may be, sickness benefit in Part I of Schedule 3 to this Act; or
(b) the person would on that day have been entitled to a Category A retirement pension if he had retired from regular employment on attaining pensionable age; or
(c) the person is a woman and—

(i) she would on that day have been entitled to a Category B retirement pension and the husband by virtue of whose contributions she would have been so entitled is dead, but
(ii) she has made an election for the purposes of section 26(2) of this Act (return to work after retirement) and has not revoked her election.



(2A) A person shall not be entitled either to unemployment benefit or to sickness benefit for the first 3 days of any period of interruption of employment.
(3) In the case of a person entitled under subsection (2)(a) above'.

No. 17, in page 17, line 44, leave out subsection (6) and insert:
'(6) In the case of a person entitled under subsection (2)(b) or (c) above (being over pensionable age), unemployment benefit or sickness benefit shall be payable at the weekly rate at which, apart from any increase to be disregarded for the purposes of this subsection, the retirement pension referred to in the applicable paragraph of subsection (2) would have been payable; and the increases to be so disregarded are—

(a) any increase (for days of increment between pensionable age and retirement) under section 24(4) or (5) or 25(10) of this Act;
(b) any increase (for dependants) under section 31 or 35; and
(c) where the claim is for unemployment benefit, any increase (for invalidity) under section 24(7);
and in determining for the purposes of this subsection the rate at which a retirement pension would have been payable, section 26(1) of this Act (earnings rule) shall be taken not to apply'.

No. 18, in page 18, line 19, leave out subsections (8) and (9).—[Mr. Dean.]

Clause 11

INVALIDITY BENEFIT

Amendments made: No. 19, in page 19, line 18, after 'satisfies', insert 'either of'.

No. 20, in page 19, line 25, leave out 'be' and insert:
'on that day have been'.

No. 21, in page 19, line 29, leave out 'be' and insert:
'on that day have been'.

No. 22, in page 19, line 31, leave out 'be' and insert
'have been'.

No. 23, in page 19, line 38, leave out from beginning to 'between' in line 3 on page 20 and insert:
'(4) in the case of a person entitled to an invalidity pension under subsection (2)(a) or (b) above (being over pensionable age), the pension shall be payable at the weekly rate at which, apart from any increase to be disregarded for the purposes of this subsection, the retirement pension referred to in the applicable paragraph of subsection (2) would have been payable; and the increases to be so disregarded are—
(a) any increase (for days of increment'.— [Mr. Dean.]

Clause 12

DETERMINATION OF DAYS FOR WHICH BENEFIT IS PAYABLE

Amendment made: No. 24, in page 21, line 15, after 'weeks' insert:
'("week" for this purpose meaning any period of 7 days)'.—[Mr. Dean.]

Clause 14

DISQUALIFICATIONS AND SPECIAL CONDITIONS

Amendment made: No 25, in page 25, line 18, at end insert:
'and
(d) "week" means any period of 7 days'.— [Mr. Dean.]

Clause 15

ATTENDANCE ALLOWANCE

Mr. David Price: I beg to move Amendment No. 26, in page 25, line 36, at end insert:
'(2) The Secretary of State shall have power by affirmative resolution of each House of Parliament to amend the qualifying conditions for an attendance allowance in subsections (1)(a) and (1)(b) of this section'.
In moving the amendment I once again declare my personal interest in improved benefits for the disabled. I


have made this declaration so often that I believe I am in danger of tedious repetition. Tedious repetition is closely allied to tedious frustration, which the House will appreciate is the lot of many disabled people. I trust that the wording of my addendum is clear to the House and that it presents no difficulties to the lawyers amongst us and especially to those guardians of legal propriety, the parliamentary draftsmen.
The effect of the amendment is to enable the Secretary of State to alter the definition of the necessary qualification for the higher and lower rates of attendance allowance by affirmative resolution of both Houses without recourse to the full parliamentary procedure of amending legislation.
In my judgment the affirmative resolution procedure ensures sufficient and appropriate parliamentary control. There are others who suggest to me that this could be done by negative procedure, if not by regulation, but in my drafting I have erred on the side of parliamentary rectitude. The only possible source of objection to my drafting of this addendum might come from the Treasury. This would be on the primitive basis that any parliamentary device which makes it potentially easier for the Secretary of State in charge of a spending department to commit the expenditure of more public money in perpetuity should be resisted in principle. I appreciate the Treasury's proper concern for prudent conservation of public moneys, but in the case of the attendance allowance I do not believe that there is any danger of prudence being replaced by extravagance.
4.45 p.m.
We have a long way to go in our financial provision for the disabled before we need to concern ourselves with the risk of extravagance. Therefore, we note this possible minor criticism of principle from the Treasury and at the same time we can dismiss it as being liturgical rather than real.
My reasons for suggesting that this would be a useful addition to the clause are that it would be not only useful but positively an improvement, and I shall endeavour briefly to outline some of them. No doubt other hon. Members

will be able to elaborate upon them. I am convinced that each of my reasons is in itself sufficient justification for the amendment, but that the sum of the reasons makes the case irresistible. I shall attempt to explain the reasons in an ascending order of complexity.
The first is the narrow and technical one that no one is certain that the present definition of the necessary qualification for the attendance allowance is sufficient to achieve the purposes of the Government and the House. I read with great interest an exchange in Standing Committee between the hon. Member for Rhondda, West (Mr. Alec Jones) and the Under-Secretary as to the relative importance of the two phrases "frequent attention" and "prolonged and repeated attention" in subsections l(a) and 1(b).
Let me remind the House of the relevant words in the subsection concerning qualification for the attendance allowance. I take subsection 1(a) as being representative. It says:
he is so severely disabled physically or mentally that, by day, he requires from another person either—

(i) frequent attention throughout the day in connection with his bodily functions; or
(ii) continual supervision throughout the day in order to avoid substantial danger to himself or others".


One of the trigger phrases is "bodily functions", and I suggest that there is a good deal of doubt how this phrase could and should be interpreted. Certainly my doubts are shared by many general practitioners whom I know.
For example, does the phrase "bodily functions" include any or all of the following activities: getting in and out of bed; dressing and undressing oneself; going to the lavatory; washing, and, if a man, shaving; having a bath; having a shower; eating and drinking; preparing, cooking and serving one's own food; moving in and out of one's own bedroom; and moving in and out of one's home? The disabled person's ability to fulfil many of these bodily functions without assistance can depend as much upon the degree to which that person's home has been adapted and equipped as it does upon the degree of disability itself.
For example, one's ability to bath oneself depends upon the equipment in the bathroom. One's ability to get in or out of a room depends on whether there is a step and whether one is in a wheelchair


or not. If there is direct access on to a public pavement there is nothing that can be done by way of ramping and, therefore, the step is a complete obstacle, an impasse, for fulfilling the bodily function of getting into and out of the home.
This very important but variable in-ingredient is totally overlooked in the present definition of the attendance allowance. I suggest that we are wrong to overlook it. When we consider the question of personal self-care, we must add a further and important dimension to the phrase "bodily function". At present this dimension of self-care is ignored in determining the eligibility for either rate of attendance allowance. I would argue that if a disabled person is incapable of self-care he cannot be said to be independent of help from another person in his bodily functions.
I shall not detain the House by developing these arguments further. I trust that I have said enough to establish the case that the definitions in Clause 4 are open to improvement. When the clause was debated in Standing Committee my hon. Friend the Under-Secretary admitted that this was so. He said:
We shall certainly wish, as we go along, to keep all the phrases and arrangements under close review. I do not claim for a moment that we have it absolutely right. It would be surprising if we had at this early stage.
Later in the same portion of his speech he went on to say:
as the extended allowance is so new, we should not have enough experience to come back with new suggestions on Report, but perhaps later, when we have had more experience, if amendments appear to be appropriate we shall not hesitate to come forward with them."—[OFFICIAL REPORT, Standing Committee E, 20th February 1973; c. 617.]
They are admirable sentiments; but without my addendum my right hon. and hon. Friends the Ministers will find it extremely difficult to introduce their amendments. They will need fresh legislation, and we all know how consuming of parliamentary time that can be, and, therefore, how reluctant are all Governments to add to their legislative programme. So my addendum helps the Government, and I am, therefore, sure that they will accept it.
My second reason in support of the amendment flows from the first. It relates to the widening of the definition of quali-

fication for attendance allowance as our experience of its administration develops. This might well involve an extension of my concept of self-help from bodily functions into the wider social context. After all, modern man is a gregarious animal who is not sufficient unto himself. When we debated disability last month, I suggested that in the context of widening the definition of the attendance allowance we might consider such concepts as the ability to fulfil one's normal domestic duties appropriate to one's age and marital status.
In other words, we should add a social dimension to the concept of self-help. Of course, I accept the argument that until we have more experience of the new lower-rate attendance allowance it might be argued that it is premature to attempt to widen definitions in the clause. That is why I have not attempted at this stage to amend the definition, but I believe that it is a just reason for taking powers now for a later extension of the definition in the light of experience. That is, after all, what the Government have done in the past.
Within two years of introducing the original constant attendance allowance, very much to their credit, the Government found it both right and necessary to introduce the lower-rate attendance allowance. I am confident that this will happen again, so I wish to see the Government of the day equipped with the necessary powers.
My third reason flows from the second, and it is a wider reason for the amendment. The attendance allowances are possibly a base upon which to construct a disablement income. I trust that at this stage in the development of our ideas as to what constitutes a just and compassionate society it is not necessary to repeat the broad, strategic case in favour of some form of national disablement income.
I was glad to read in Monday's edition of The Times that my right hon. Friend had told the annual general meeting of DIG that
the introduction of a disablement income to compensate for loss of earnings and extra living expenses is only a matter of time.

The Secretary of State for Social Services (Sir Keith Joseph): I am sorry to


interrupt my hon. Friend, but what he said gives me an opportunity to say that, most unusually, The Times has taken a phrase out of context. In fact, there was a negative somewhere in the paragraph. If my hon. Friend is not careful, I shall send him a copy of my 27-page speech.

Mr. Price: My right hon. Friend's private office, with its normal courtesy, sent me a copy, but I have had time to read only half. If the debate on the amendment had begun later I could have read the whole of the correct version. Even if my right hon. Friend did not say what he is reported to have said, I am sure that he agrees with it in spirit, as does every other hon. Member, and so we take that as read.
To achieve the strategic objective of a national disablement income, there are a number of alternative tactical routes. First, we could use the invalidity pension and the invalidity benefit as our base and build upon it. I should like my right hon. Friend to tell us how many severely disabled people will benefit and are benefiting from the new pension and new allowances.
Secondly, as an alternative, we could take the industrial injuries concept and apply it to all forms of civilian disability, however incurred. A recent Question to my hon. Friend the Under-Secretary elicited the rather frightening reply that to follow that route could cost up to £1,000 million a year extra. Naturally, on a later occasion we shall wish to pursue with him the make-up of that formidable figure. I do not believe that we should abandon the industrial injuries approach out of hand at this stage, because it has the great merit of being graduated according to the degree of disability.
We could take a third route, the attendance allowance route. That is the point of my amendment. The allowances have the merit of being universal, outside national insurance, tax-free and paid regardless of age, means, or contributions. For disabled housewives who are not insured in their own right but are covered by their husbands' national insurance, the attendance allowances seem to offer a rather better route to financial provision for their disability than do the alternatives.
I recently tested with my hon. Friend the Under-Secretary one of the alternatives, the invalidity pension route. He made it perfectly clear that under the present thinking, which is repeated in the Bill, it would not be available for the disabled housewife, because she would not have her insurance passport into that route. That encouraged me to think that the attendance allowances are the right base, at least in respect of the disabled housewife, if not all other categories of disabled people. It has the major advantage of overcoming the insurance difficulty.
Official thinking should move on from the primitive concept of a housewife being a non-worker simply because she is not on someone's payroll. The recent DIG pamphlet stated:
The official view of the housewife as a non-worker is nonsense. The economic wreckage that the disablement of a housewife visits upon her family is often greater than would be the case if the man was disabled. Her husband's ability to work properly, and in many cases his opportunity to work at all, is destroyed. Housewives are in fact the supliers of most of our manpower. They are workers, and should be pensioned like any other workers.
I am encouraged that my addendum is the right approach when I read my right hon. Friend's speech to the DIG that I have quoted, where I see the words:
In introducing attendance allowance, we introduced a benefit which is based on just this basic principle, what I might call entitlement by right of disablement. I would doubt whether we have exhausted the possibility for developing that principle.
My addendum gives my right hon. Friend the vehicle to develop those possibilities.
5.0 p.m.
These three routes are some of the alternative tactics by which we can achieve our strategic objective of proper financial provision for the disabled. It may be that the right answer will be a mix of the three. But I am convinced that the attendance allowance as of now appears to offer us the route by which we can make most progress in the short run. We could find ourselves having to consider different methods of provision according to age. Amelia Harris's great survey brings out very clearly the extent to which severe disability is a product of advancing years.
But these are thoughts for another occasion, as is the idea that the adult disabled of working age with limited work opportunities might look to a combination of wages and benefit for their income. We must do some fresh thinking here. We can learn from our European colleagues, as we can right across the board of provision for the disabled.
For all these good and many reasons, I offer the addendum for the consideration of the House as a constructive further step towards proper provision for the disabled.

Mr. Alec Jones: I support any attempt to extend the provisions of the attendance allowance. All hon. Members will agree that it has done good work, and we hope for greater things from it. But what we are asked to discuss in the amendment is not whether attendance allowance should be extended to cover many other aspects of disability, nor what degree of disability it should cover, but whether the affirmative resolution is the correct vehicle for bringing about that sort of improvement which we all want.
Without disagreeing with the motive behind the speech of the hon. Member for Eastleigh (Mr. David Price), I feel that the annual uprating Bill that we now have, which the Secretary of State used to introduce the attendance allowance at the lower rate, gives us an opportunity annually to examine the whole picture of the attendance allowance. Much as I want to improve the attendance allowance, I believe that to do it by affirmative resolution would deny the House adequate opportunity to discuss and amend the propositions that the Government may or may not make.

Sir K. Joseph: I welcome the hon. Gentleman as a potential ally, but I should not like him to continue his speech under a misapprehension. My hon. Friend the Member for Eastleigh (Mr. David Price) is surely right, because he has taken into account that, under the Bill, uprating of benefit will be possible by regulation after 1975, and so there will be no need after that date for an annual uprating Bill if the only purpose is to increase benefits or contributions.

Mr. Jones: I take the right hon. Gentleman's point. I am sorry to tell

him that the alliance between us which lasted for about two-and-a-half seconds is quickly destroyed. If he is now saying that we are not likely to have a vehicle that will give us the means to improve the attendance allowance. I am prepared to withdraw my initial remarks and indicate my complete support for the hon. Gentleman, because it is clear that if we are not to have a regular vehicle whereby we can examine the attendance allowance it is desirable to put the Government on the spot by providing that opportunity.

Mr. Nicholas Edwards: I support my hon. Friend the Member for Eastleigh (Mr. David Price). My right hon. Friend the Secretary of State has just made an overwhelming case for supporting the amendment.
All hon. Members must have been impressed in their constituency work by the enormous requirement that has been revealed for the sort of aid that the clause gives, and by the fact that their original interpretation of the 1970 Act proved to be unfounded. Many hon. Members were surprised at the way in which the Act was interpreted initially, and we very quickly had to move on. The Government have been able to move on with speed. I take the opportunity to congratulate the unit at Blackpool on the way in which it has operated. Nonetheless, hon. Members will have seen sorts of anomalies being revealed. Different doctors interpret the Act in different ways. That has been one of the greatest difficulties that have confronted the board in carrying out its functions. The board relies enormously on the reports prepared by doctors. In practice it has not proved possible to achieve a consistency of approach from doctors.
As we move into new categories we shall find that new anomalies and fresh problems will arise. It seems that it would be eminently sensible for the Government to give themselves the additional flexibility which the amendment would provide. I appreciate that on occasions it may be necessary for much more major measures to be brought forward. The amendment will give the opportunity for marginal amendments to be made year by year. The opportunity will exist to sort out some of the difficulties that inevitably will arise. I


my right hon. Friend considers that the amendment is unacceptable in its present form, I hope that he will at least come forward with something comparable.

Mr. John Pardoe: I support this moderate amendment. I hope that the hon. Member for Eastleigh (Mr. David Price) will accept that it is such an amendment.
One approach, which is probably shared by almost all hon. Members, is that the present and proposed interpretations do not go wide enough. That is probably the view of all hon. Members, including the Secretary of State. The right hon. Gentleman would probably like to widen the scope of the attendance allowance.
That does not mean that there is a general acceptance of the principles of a disablement income to apply across the board. I happen to accept that approach in principle, but, clearly, there are differences of opinion within the parties. I accept that principle because it seems ridiculous to try to distinguish between those who are disabled by physical incapacity and those who are disabled because, for example, of old age. Indeed, people who are disabled as a result of old age may not be anything like as disabled as some younger people who are disabled through physical incapacity.
I support the amendment for two main reasons. First, are the words which are now in the Bill a sufficient description of what the Government now intend? Are they what we might like them to intend, bearing in mind that these words will be interpreted not by lawyers but by doctors, Of course, doctors are not always the best interpreters of the law of the land. I say that in the context of two cases with which I shall deal briefly. I shall give not the details but the principles at stake.
One case arose in my constituency when the first report of the medical practitioner for the Attendance Allowance Board accepted that my constituent was not able to do the things which I had said that she was not able to do. As she was not able to do them she came within the definition. However, the medical practitioner ruled her out on the ground that she was capable of dressing or undressing herself and washing and

bathing. He admitted that she could do none of those things but said that the reason she could not do them was that she made no effort. On further examination it was discovered that the lady was a chronic alcoholic and was senile. It was because she was a chronic alcoholic that she made no effort to do the things which I have mentioned.
It is extraordinary that any doctor reading the regulations which he has to interpret should make a value judgment about why a person cannot do various things for himself or herself. In the instance which I have described it did not seem to be a very valuable judgment.
Secondly, there are contradictions within the interpretations made by different doctors. One case with which I have recently been dealing illustrates my point. The commissioner has given leave to appeal. I quote the words used in the medical officer's report:
As regards the night, I note that he needs attention once or twice a night for toilet purposes. Thus, on the evidence, I do not accept that he ordinarily requires prolonged or repeated attention during the night.
As the commissioner pointed out, that is a non sequitur. It would not be thought that a doctor would say—
As regards the night. I note he needs attention once or twice a night for toilet purposes "—
and conclude from that evidence that prolonged or repeated attention during the night is not ordinarily required. However, quite a number of doctors who are being put to work by the board think that such things follow.
Therefore, my second major reason for supporting the amendment is that there are contradictions arising because of the great difficulties caused by doctors' interpretations. We shall be wanting—and so, I hope, will the right hon. Gentleman —to make changes fairly frequently in the light of experience. It may well be that there will be changes after 12 months in the light of experience of the way that the Act is being interpreted. The amendment is a good one because it will allow changes to be made with the minimum of fuss.

Mr. Robert Boscawen: I am pleased to be able to support the amendment. It seems that Parliament will have the opportunity to discuss this matter


annually as it does at the moment under the annual uprating measure. Further, it has my support because it demonstrates that hon. Members on both sides of the House want to move along the road towards some form of disability income at a quicker pace than has applied in the past.
It is an indictment of our society that a responsible group such as the Disablement Income Group, which has studied the problem over many years, should write, after the Committee stage to hon. Members who sat on the Social Security Bill in Committee as follows:
The reception given to all eight amendments made it clear that the Government and the Opposition have not yet determined precisely how the urgent financial needs of severely disabled people will be met.
We have a long way to go in determining the right way to bring a satisfactory income to severely disabled people without their having to have recourse to supplementary benefit. The Attendance Board must be building up a great deal of information. It has not been the desire or the intention of the Secretary of State to allow the board to reveal all its cases and the experience that it has been building up. That is because the Government wish the board to get on as rapidly as possible with the job of bringing an allowance to as many people as are entitled to it. That I fully understand. But I think we are moving from that period now and it is time that we had more information.
5.15 p.m.
There is a great lack of information about severely disabled people. I do not mean statistics about them, for we are overwhelmed with statistics. I mean some of the deeper problems—for example, the psychological effects of bringing help to them and the best way of doing it. What are the financial circumstances of some very severely disabled people? We need more information, and I support what my hon. Friend the Member for Billericay (Mr. McCrindle) called for earlier—that, as soon as possible, the Government should produce a Green Paper on their thinking about which of the three or four avenues which lie ahead for helping the disabled with a disablement income they see as the best way forward.
There is a lot of confusion. I confess that I have doubts about some of the ways forward which have been suggested. I believe that on Saturday my right hon. Friend referred to the entitlement by right of the disabled to some benefit. I say "to some benefit" because I have not read his speech in full, and I do not know which one he was referring to. I believe that it should be entitlement to a long-term benefit by right of disablement and that we have to get over the snag of the continuity principle in the case of the disabled housewife.

Mr. Speaker: Order. I hesitate to interrupt the hon. Gentleman but he is going a little wide of the amendment.

Mr. Boscawen: Perhaps I was going a little wide, Mr. Speaker, but I think it is important that Parliament should have the opportunity annually to discuss the principle contained in the amendment. I may be trespassing on future amendments, but I want to emphasise that the whole climate of opinion in this House and the country is moving towards a disablement income, and that part of the catalyst in this climate has been not only the outside bodies but the Secretary of State himself. I welcome what my right hon. Friend said to the Disablement Income Group and some of the principles he enunciated, and I hope he will enunciate a few more today.

Sir K. Joseph: It is very much easier to be negative if hon. Members have been nasty to me than when they have been rather pleasant. My hon. Friend the Member for Eastleigh (Mr. David Price) has put forward such a modest and sensible proposal, as it seems at first sight, and has been so briefly yet so strongly and warmly supported by hon. Members on both sides of the House that it is not a pleasure to me to spell out the reasons against his amendment.
I want first to say how much it staggers me, as one who was a Member of this House for about seven or eight years before the Disablement Income Group was formed, that this subject was kept in the quiet for so long—for decades, for generations. I doubt whether it is over going to sleep again. Whether we operate by way of regulations or rely on legislation, I do not think there is the slightest possibility of the subject going to sleep again.
My hon. Friend the Member lot Fast-leigh is a forceful advocate and very well informed. He referred, as a man with ministerial experience, to the constitutional point under which it has been the practice up till now for new benefits or changes in existing benefits to be the subject of legislation rather than of regulations This is a precaution that Parliament has generally accepted as sensible in order to put some restraint, by way of an obligation to go by the legislative route, on the creation of new public expenditure.
My hon. Friend and other hon. Members will accept that the constitutional point has not obstructed the insistence on new benefits for the disabled. In July 1970 the Government introduced the Act for the attendance allowance at the higher rate, which had been conceived by the Labour Government. In 1971, in the up rating Act, we introduced the invalidity benefit package which was our own invention, and in the uprating Act in May 1972, before we had even completed distribution of the higher attendance allowance, we brought in the lower rate attendance allowance. So, as hon. Members have recognised, we have made a reasonable start.
But there are some dissatisfactions. Hon. Members have pointed to some cases where judgments have differed. My hon. Friend the Member for Pembroke (Mr. Nicholas Edwards) kindly paid a well-deserved tribute to the departmental unit at Blackpool. I pay tribute also to the Attendance Allowance Board itself and to all the doctors who work for it. The record of sympathetic judgments on the part of all those concerned cannot be bad when we reflect that the Government originally estimated that the higher rate allowance would go to 50,000 people. In fact, it has been awarded to well over 100,000 people, of whom, unfortunately, some thousands have died or have gone into hospital. There is an award now in payment to over 90,000 severely disabled people. It may be that the Government's estimate was wrong, but what cannot be substantiated is that the attendance allowance has been in general unsympathetically applied.
Now we must see, as my hon. Friend the Member for Eastleigh said, how we get on with the new lower-rate allowance, the payment of which begins next

month. As the Government announced last week, we are going to accelerate the payments to the second group of recipients—the children—bringing them forward from December to October this year.
But, as I nave said, there are dissatisfactions. My hon. Friend the Member for Eastleigh, when he gave a catalogue of the factors which doctors ought to consider, was aware that he was quoting from the catalogue of factors which a doctor completing a form for the board is required to consider. It is the doctor's job to consider all relevant factors, and I think the House has to face the fact that, in a scheme so inherently dependent on the judgment of the many people involved, there may always be some difference in opinion on any particular case.
Nevertheless, if a claim is refused, a review can be requested, and then there is a visit by a Department doctor in order that there should at least be some centralisation of the appeal machinery. I shall not comment on the individual cases quoted because that would not be proper. The decisions are the board's, and I have every confidence in its intention to make the right, and, where in doubt, the sympathetic, decision.
I come now to the main point of the amendment. There is no desperate urgency about the position because we have one more uprating Bill under the present proceedings. There is to be one in 1974. From 1975 onwards we shall have power, if Parliament approves this Bill, to alter benefits and contributions by way of regulations. The House will be aware that we introduced this power because it was the only way to make certain that we could honour our guarantee of an annual uprating. No Government can commit themselves to finding legislative time in a particular session, but they can commit themselves to finding time to introduce regulations. But that is a point which goes in support of the amendment.
In the light of the pressure to improve the treatment of the disabled, I cannot imagine that a Government of the day will ever lack a vehicle or be unwilling to create a vehicle by which to bring about improvements. My hon. Friend will have realised that the benefits can be uprated by regulations each year, and


there is an automatic vehicle in the up-rating regulations. I assure him that, if the time is ripe, if the economic conditions allow and if we have arrived at a proper assessment of priorities, the Government will not be restrained by any lack of legislative opportunity during the remainder of this Parliament.
In the light of these considerations, I hope that my hon. Friend will not press his amendment, but will rely upon the force of the lobby in the country and in the House and rest content that the pressure will remain upon Governments so that his amendment will not be necessary to achieve the aims we all want.

Mr. Michael Meacher: I welcome the amendment and congratulate the hon. Member for Eastleigh (Mr. David Price) on the eloquence and sincerity with which he moved it.
The hon. Gentleman is right in saying that there is an advantage in flexibility and in the Secretary of State having the opportunity to alter the criteria of both the higher and lower rate attendance allowance without the need to bring forward legislation. There is no risk of extravagance towards the disabled. He is right that the criteria, however well chosen, are bound to be open to equivocation and susceptible to improvement. Whatever criteria are chosen are as likely to be dependent on the availability and adaptation of the house or room in which a disabled person lives as on that person's degree of disability.
I agree with the hon. Member for Eastleigh that there is a need—I would say an earlier rather than a later need— to move towards social criteria and making the capacity to perform or otherwise normal domestic and social activities appropriate to a person of that age and sex. That is the goal in terms of a definition at which we should aim. The achievement of that aim would be facilitated by acceptance of the amendment.
I accept, too, that the attendance allowance is probably the most suitable vehicle for moving towards a national disability income. I agree also that the universality of the attendance allowance —the fact that it is outside the national insurance system and tax free, combined with graduation according to the degree

of disability in the industrial injury system—probably points the way forward.
We should not be too much put off by the £1,000 million cost that has been estimated for such a benefit. The cost clearly depends on whether the benefit is tax free, the criteria of disability involved and the scope.
Having said all that, I am in some sympathy with what the Secretary of State said. The real difficulty here is not the lack of flexibility or the linguistic criteria by which one defines "disability". It would be valuable to have an opportunity to discuss and examine the progress in the coverage and scope of the attendance allowance, particularly in the absence of an uprating Bill in 1975, but the real block is not there. The key part of the Secretary of State's speech was when he said that the Government proposed to move forward if economic conditions allowed and in accordance with the economic priorities of the Government at that time. That is the gist of his words—I may have paraphrased them. The real reason why we are not moving forward faster is not the difficulty of language and not that those who have to administer the benefit are unduly restricted by the criteria. If he were so minded, the Secretary of State would not find it impossible to introduce a small Bill to extend the criteria. The real reason is finance, and we dodge the issue if we pretend otherwise.
5.30 p.m.
At present very few even of the severely handicapped are getting help. The Secretary of State said that 90,000 persons are getting the attendance allowance at the higher rate, but the Government handbook "Impaired and Handicapped in Great Britain", published in 1971, estimated that there were nearly 1¼ million people who were severely and appreciably handicapped in Great Britain. For 90,000 to be receiving help does not take us very far.
Even by 1975–76 the lower attendance allowance will cover only up to another quarter of a million. The Government have perhaps overestimated the rate at which claims will come in, and by that date the number may prove to be rather less than was at first thought. At present not even the very severely handicapped


are covered and by 1975–76 perhaps one-third or one-half of the half a million very severely and severely handicapped will be covered. We are making some progress, but it is a fairly unsatisfactory rate of progress. What count are the economic priorities and the willingness of a Government to give more priority to the disabled. That is far more important than providing greater flexibility in criteria.
Although those are perhaps harsh words, I still remain in favour of the amendment. It is desirable to have an opportunity for discussion, and greater flexibility is desirable. But that is not the blockage. What is wanted is for the Secretary of State to use this amendment as an opportunity to offer greater resources to the movement towards a national disability income. We need a more forthcoming Secretary of State if we are to make progress towards the object we all wish to achieve.

Mr. David Price: My right hon. Friend the Secretary of State, as always courteous, referred to my first series of points. The list of bodily functions I gave did not come from the official list; it is my own list. One or two items in my list are not included in the official list. Perhaps my hon. Friend's Department will consider this point, and he and I might possibly talk about it. There is even doubt about the phrase "bodily functions". If my right hon. Friend will do that it will assist me greatly in seeking to withdraw the amendment. As it is a major factor which concerns the 1974 uprating Bill, that would cover the substance of my second point. My third point, which I pinned on this narrow amendment, goes wider, and I am grateful to my right hon. Friend for his comments.
My right hon. Friend referred to the lobby in the country and the House which will not allow the subject of disability to go cold. I shall continue to be a member of that lobby—it would be surprising if it were to be otherwise.
I speak for many of my right hon. and hon. Friends and for many right hon. and hon. Gentlemen on the Opposition benches in saying that I hope that in the not too distant future, when my right hon. Friend and his team of Ministers

have deliberated further, a Green Paper will be issued. That would be immensely helpful to all of us who are concerned with disability and it would clarify the situatiton rather more than would continued general debate.
I thank my right hon. Friend for his outstanding courtesy. That is no more than we have come to expect from him, as opposed to what we have experienced in the past from other right hon. and hon. Members on the Treasury Bench.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 21

WIDOW'S PENSION

Dame Joan Vickers: I beg to move Amendment No. 27, in page 32, to leave out lines 30 to 32.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): With this amendment it will be convenient to discuss Amendment No. 184, in Clause 20, page 32, line 7, at end add:
' ( ) Nothing in subsection (3) above shall prevent the continued payment of any amount payable under section 31(4) of this Act'
and Amendment No. 182, in Clause 79, page 105, line 7, leave out from 'death' to end of line 9.

Dame Joan Vickers: Clause 21 was not debated in Committee. For that reason this may be considered to be a completely new point. In view of that, 1 hope that my hon. Friend the Undersecretary will come to it with a fresh mind and accept my amendment.
The clause sets out the circumstances in which women may receive pensions. However, they immediately lose their pensions on remarriage. In my view that is very unfortunate, especially when one considers that it may be a time when they are setting up house and may need the money.
It also occurs to me that this provision may also affect Armed Forces pensions even though they come under a separate Act. If a widow receiving an Armed Forces pension remarries, does she lose her pension? I assume that a woman will be allowed to keep an occupational pension if she remarries. But what


happens when men have paid into a widows' and orphans' pension fund such as the one we have in the dockyards? If a widow remarries, her children are still half-orphans. Will they get any of the money? Will a widow in those circumstances lose the pension for which her late husband specifically paid?
I am seeking to delete the last three lines of the clause because I particularly dislike the Government's proposal about cohabiting——

Mr. Deputy Speaker: Order. I am having some difficulty in hearing the hon. Lady. I am reluctant to miss any of her pearls of wisdom.

Dame Joan Vickers: Perhaps it will help if I move nearer to one of the microphones, Mr. Deputy Speaker. I suppose that you would not like me to begin again. I hope that the HANSARD reporters have been able to hear me. It may be that they will let you have a transcript of my remarks.
I was referring to the situation in the dockyards where workers pay into a special fund for their widows and orphans. If a woman in receipt of a pension of this kind remarries, will her children be able to benefit from the money that her late husband contributed to the fund?
As I was saying, I particularly dislike the Government's attitude towards cohabiting. First, they stop the pension. Then, to make sure that the widow does not get any money, they add the words:
… or for any period during which she is cohabiting with a man as his wife.
I suggest that it is almost impossible to know when a woman is cohabiting unless it is done over a very long period. It means that again we shall have a band of snoopers going the rounds. We all know what happened previously. My hon. Friend stopped snoopers going into people's houses at six o'clock in the morning and setting neighbour against neighbour. We do not want this happening in the future.
If my hon. Friend cannot accept my entire amendment in regard to the pension, I hope he will consider deleting this reference to cohabiting. After all, a widower can remarry and keep his pension. As far as I know he can cohabit. I do not know of any Act which says that he cannot. It is very

unfair that a woman should be treated in this manner. Her late husband will have paid for her pension. What is more, very often she has worked just as hard. She will have looked after her husband in his lifetime and cared for any children of the marriage. It may be that her husband was a semi-invalid for much of his life, with the result that she had to work and be the breadwinner of the household. In such circumstances I suggest that she, too, has worked for her pension. Yet, having been widowed, she will lose everything if she remarries. This is very unfair.
I find it strange to have a provision of this kind in the Bill when recently our judges were told that they must not decide the damages which a woman should receive on the basis of her chances of remarriage. They have to decide on the merits of each case. I think that a woman who has looked after her husband and possibly been the sole breadwinner is justified in keeping her pension.
It is said that for reasons of expense a woman cannot be allowed to continue having her pension if she is supported by another man. I hope that my hon. Friend will consider removing the cohabiting provision. It is an insult to the women concerned.
We are now in the Common Market. Like us, the Common Market countries do not allow women to receive their pensions if they remarry. However, they are much more generous than we are. The Belgians give a lump sum for two years after a remarriage. In Germany it is given for five years. In Italy, which is not such a rich country as we are, it is given for two years. In Holland it is given for one year. Even Luxembourg has a scheme; a lump sum is paid for five years to any woman who remarries under the age of 50 and for three years if she is over 50.
If my hon. Friend cannot accept my amendment in this form, I hope that he will consider that we ought to bring ourselves into line with the other Common Market countries. This would be very beneficial to widows. After all, it is their right to have equal treatment with widows in the countries of our new partners in Europe.

Mrs. Joyce Butler: My remarks are directed to Amendment No.


184, which is designed to answer a question asked by the hon. Member for Plymouth, Devonport (Dame Joan Vickers) about what is to happen to the allowances for children of a widowed mother when she remarries.
When a similar amendment was discussed in Committee it was said to be "obscure". However, in my view it is not obscure, because the reference to Clause 31(4) is a reference to the child allowance which at present the widowed mother will lose. The purpose of the amendment is to ensure that the child allowance is retained if she remarries.
The principle behind the amendment was referred to just now by the hon. Lady. It is that the late father has provided insurance cover for his whole family and that this should not be terminated automatically if and when his widow remarries.
A great many matters were raised on this principle in Committee, and the Minister undertook to look at them. I expect that it is much too soon for him to have examined them in any depth since then, but I hope very much that he will instigate the research into the problem which he promised.
5.45 p.m.
It was also interesting to note from the debate in Committee that this idea was referred to as a novel suggestion. It is very strange that it should be regarded as a novel suggestion that the children of ordinary widows should have the right to benefit from an allowance if their mother remarries. War widows do not suffer in the same way as ordinary widows. Child allowances continue without any restriction if war widows remarry. Industrial widows also continue to receive a child allowance if they remarry. With industrial widows the allowance reduces after remarriage. Before remarriage an industrial widow receives £3·30 a week for the first qualifying child, £2·40 for the second child and £2·30 for each further child. If she remarries the allowance becomes £2·10, £1·20 and £1·10 respectively.
The principle has been accepted in respect of both of these categories of widow, so it is hardly a novel idea to suggest that ordinary widows should be treated in the same way. I do not know

the reason behind the present situation relating to child allowances paid to war and industrial widows. It may be the principle that the child's welfare is the prime consideration. If this is so it must apply equally to the children of ordinary widows if those widows remarry. The welfare of the children of these widows should continue to be the prime consideration, and so the child allowance should continue.
It is highly undesirable that widows should be classified in this way, and I hope that we rapidly move away from this idea. It is wrong that a widow should be so classified and entitled to different treatment merely on the circumstances in which her husband died. It is even more wrong that children should suffer from this type of classification because of the circumstances in which their fathers died.
There is a serious principle involved here. I hope the Minister has had time to consider the matter and will give a more helpful reply now than he was able to do in Committee, when he regarded it as something new which he had not considered. I hope that on mature consideration the Minister can be more helpful. We should be concerned about the welfare of the children. The circumstances of the father's death should not in any way prevent them from enjoying continued benefit if the mother remarries.

Mr. Terry Davis: I should like to express my general support for the amendment moved by the hon. Member for Plymouth, Devonport (Dame Joan Vickers) and also the amendment tabled by my hon. Friend the Member for Wood Green (Mrs. Joyce Butler). I agree entirely with the views expressed about snoopers by members of the Committee and again today by the hon. Member for Plymouth, Devonport. I also agree that a marriage is a partnership and that a pension is earned by a man and wife and not by the man alone. Therefore, if the man dies the wife should have entitlement to a pension which she has earned and the entitlement should continue even if she remarries.
I take this opportunity to draw to the attention of the Minister Amendment No. 182 standing in my name. This would make the same change in the widow's


pension under the reserve scheme as Amendment No. 27 would make to the widow's pension under the basic scheme. I hope that the Under-Secretary will take the opportunity to deal specifically with my amendment in his reply. If I may anticipate his remarks I suspect that he will reject the amendment of the hon. Member for Plymouth, Devonport on the grounds that it would be expensive and that public funds are involved because the Government would provide some of the money.
Although I am not sure that I would accept that argument, I recognise that social security is involved to some extent in the basic pension scheme. On the other hand, I do not see how this can apply to reserve pensions because these pensions are entirely financed by contributions from employers and employees. In effect, a reserve pension and a widow's pension under the reserve scheme are deferred pay for an employee. I do not see why this deferred pay should be forfeited because a widow remarries.
In an occupational pension scheme it is open for the trade union or other representative of the employee to negotiate for a widow's pension to continue after remarriage. I do not think it is unreasonable for this provision to be included in the reserve scheme. I would ask the Minister to consider, for example, the situation about which we all hear from time to time when two elderly people decide to marry. Sometimes it is a widower who marries a widow. As I understand the provisions of the Bill, if the widow was receiving a reserve scheme pension she would lose that upon remarriage and the newly-married couple would not receive any compensatory payment through the pension schemes. As I have already said, the taxpayer would not make a contribution, and if the Minister will not amend the basic pension scheme along the lines suggested in Amendment No. 27 I hope he will accept my amendment which goes some way in the same direction. Of course, it would mean some increase in cost and presumably in contributions. If he rejects my amendment for this reason, I hope he will tell the House how much would be involved.

Mr. James A. Dunn: I add my voice to those who have

already spoken in support of this proposition. I refer particularly to Amendment No. 27 which deals specifically with capitation. This rule operated by the Department has many facets. It embraces even those who are included in widows' allowances. I ask the Undersecretary to review the conditions for certifying or dealing with alleged cohabitation. There are many problems associated with this. It is well known that there are areas of concern and that it causes anxiety for many people.
If it is not possible for a reply to be given today, I would point out that the Bill will be going to another place. Can the Minister give an undertaking that he will review the cohabitation rule referred to in Clauses 19, 20 and 21?

Mr. Dean: My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) has today raised many of the problems affecting widows, as she has done on a number of other occasions. I assure her and the House at the outset that the Government are most sympathetic towards the general points she has made. I hope the House will feel from what the Government have tried to achieve in this Bill and in other legislation that not only are we sympathetic towards widows but that we have taken a number of important steps to try to ease their lot and help them in the difficult circumstances in which they find themselves.
One of the first acts of the present Government was to introduce within the National Insurance Scheme the new pension for widows between the ages of 40 and 50 who were not previously eligible for pension. The pension for the over-80s goes to a large extent to women because they live a great deal longer than men. We have also introduced a number of improved arrangements for war widows, a subject in which my hon. Friend has shown considerable interest. The recognition conditions for the second pension provide for the first time that all recognised occupational pension schemes must provide cover for widows. The same applies to the reserve scheme. I hope the House will feel that not only are we showing sympathy towards widows but that we have taken practicable steps to help them.
My hon. Friend also drew comparisons with other European countries. We are carefully studying the experience of the EEC countries to see what we can learn from them because we are very ready to do so when they are doing better than we are. It is difficult to make exact comparisons. There may be some areas of widowhood covered among those countries which are in advance of our practices. I suspect that there are other areas where we are in advance of them. When it comes to general family cover in pension arrangements, it is fair to say that there are a great many gaps in European countries whereas we provide such cover in our system. It is difficult to draw general conclusions about what is happening in the other EEC countries.
Understandably, my hon. Friend also mentioned the children of widows who remarry or widows who cohabit. The hon. Member for Wood Green (Mrs. Joyce Butler) raised this point too. She made the point that, in her opinion, the children of these widows suffered, particularly when the mother remarried. I do not think that this is so and I would like to explain how the arrangements work particularly the widowed mother's allowance.

Mr. O'Malley: It would be helpful if at some stage the hon. Gentleman could say what would be the cost to the National Insurance Scheme if the Government accepted Amendment No. 184. The Minister has had time to consider this because I tabled the amendment at the time of the Committee proceedings.

Mr. Dean: Perhaps I can go on to deal with the position of children. Allowances for a widow's dependent children are an increase in the widowed mother's allowance, not a benefit in their own right. They are subject to the same conditions as the substantive benefit. The general rule is that a woman can qualify for benefit only on the contribution of a man if she is either married to him at the time or she is his widow. A widow who remarries becomes along with her children, part of the family of her new husband. He is able to claim dependency increases for them on his own contributions when he is sick or unemployed and when he retires.
If the widow who has remarried is widowed again, she will be eligible for the widow's benefits on her latest husband's contributions. The point is that either the widow will be receiving benefits for her children because she is a widow or, if she remarries and becomes the member of another household, those children will continue to be entitled to benefits within the new family she has joined. There should not be a gap in the arrangements.
My hon. Friend also asked me about the practice in occupational pension schemes. They differ. In many cases such schemes do not continue the pension when the woman marries because it is felt that she will be obtaining cover through her marriage. Equally, with cohabitation there are some schemes which have written into their rules provision for the withdrawal of the pension in the event of cohabitation. Here again, it depends on the judgment of the scheme concerned
6.0 p.m.
I turn now to the point about cohabitation which was mentioned particularly by my hon. Friend the Member for Devon-port and by the hon. Member for Broms-grove (Mr. Terry Davis). I assure the House that any inquiries are made with extreme care and discretion, as they must and should be in this delicate area of human relations. The hon. Member for Liverpool, Kirkdale (Mr. Dunn) is also interested in this matter and has just spoken about it.
I assure the House that there is no question of a widow's benefit being withdrawn on suspicion, tittle-tattle, talk in the neighbourhood or anything of that kind. The officers concerned must be satisfied that there is a stable union between the man and woman concerned. Even if, after careful inquiries, they are satisfied that that is the position, if the woman concerned feels that her allowance has been withdrawn unfairly she can appeal through the independent appeal procedure.
Were the benefit not to be withdrawn in those circumstances we should, in effect, be saying that a man and woman living together but not married should be in a preferential position regarding benefit compared with a man and woman living together who are married. I do not think that anyone would wish us to get into that position. It is for that reason that cohabitation arrangements have existed for


such a long time. I hope the House will feel that in principle they are justified for that reason.
The hon. Member for Bromsgrove asked about the reserve pension scheme. I think that he answered the question for himself. He admitted that so far as the reserve pension scheme is concerned, for the pension to be maintained on either co-habitation or remarriage would increase the cost. It certainly would. It is not possible for me to give figures, because I do not know how many cases would be involved. Therefore, we are up against the question of priorities within the reserve pension scheme. Do we wish to increase the cost to provide cover for people who, in many cases, will be eligible for another pension and will have widowhood cover on the basis of remarriage? I suggest that this is not the highest priority that we should give in a scheme of this kind.

Mr. Terry Davis: Surely the Minister is under an obligation to attempt to make an estimate of the cost of some such amendment. The Government have had plenty of notice of this subject because it was debated in Committee. It should have been possible to arrive at a statistical idea of the number of widows who remarry and, therefore, an approximation of the cost. My own opinion is that it must be very small.

Mr. Dean: It is difficult to answer the hon. Gentleman's question because we do not know how many people will be in the reserve scheme. It must be a matter of pure speculation. However, in answer to the hon. Member for Rother-ham (Mr. O'Malley), I can give some indication of what the cost would be for the basic scheme. It is easier to give figures for the basic scheme because we know the numbers involved. The cost of continuing payment, after remarriage or cohabitation, of the child dependency part of the widowed mother's allowance would be about £500,000 a year in 1975– 76 rising to about £6 million a year after 19 years, but there would be a small saving on supplementary benefit.
I turn now to the point made by my hon. Friend the Member for Devonport regarding widows who remarry. This is in addition to the point I have made about children, which. I hope I have

covered to her satisfaction. Again, we come up against the harsh reality of priorities for the scarce resources which are available to the National Insurance Scheme.
The widow who remarries becomes part of another household. In other words, she is in a similar position in this sense to any other married woman. Were we to say that she could retain her widow's pension within the national insurance arrangements, despite the fact that she has remarried, I think that a woman who is married for the first time could say "This is an unfair situation. Why, now that she is in much the same position as me, should she have an additional pension and I should not?"
In the light of the scarcity of the resources which inevitably there is and always will be in the National Insurance Scheme, would my hon. Friend give a higher priority to this proposal than to doing more for the older widow living on her own, for the very old, the sick and the disabled? We are up against the allocation of priorities.
Having covered, I hope to my hon. Friend's satisfaction, the position regarding children in these cases within the National Insurance Scheme, having explained the way that the cohabitation rules are administered and the reasons for them, and having explained what we have already done to improve the position of widows, I hope she will agree that in the circumstances we have got the right priorities here.
I am grateful to my hon. Friend and, indeed, to all hon. Members who have taken part in this debate. I assure the House that the Government are extremely anxious to go on improving the lot of widows and the benefits available to them because they represent one section of our community which is most in need of help and support from our social services.

Mrs. Joyce Butler: May I ask the hon. Gentleman to comment on the difference in the treatment of the child allowance for the different categories of widow when they remarry?

Mr. Dean: The main allowances for the war widows come through the national insurance rather than the war widows' scheme as such. The allowances within


the National Insurance Scheme for children and other dependants have taken on the original rôle which the allowances had in the war pensions scheme when it was first formulated, which was long before the National Insurance Scheme came into being. In the Industrial Injuries Scheme there is some preference, but, as the hon. Lady recognised, there is a reduction of the allowances for children in these cases.

Mrs. Barbara Castle: I have a good deal of sympathy for the arguments that have been put forward by the movers of the three amendments that we have discussed this afternoon. The discussion has led us back to the heart of the argument that we had in the early hours of this morning on the married women's option about the whole principle of dependency.
As long as we accept the principle of family cover and dependency there is a great deal of logic in what the Undersecretary has said, because, as the hon. Member for Plymouth, Devonport (Dame Joan Vickers) argued, her amendment is a profound break from the whole principle that has underlined the National Insurance Scheme to date. The hon. Lady has been expressing the growing desire of women for a pension in their own right, for equal treatment as individuals—in other words, the rejection of the concept of family cover which the Government were justifying so strongly in the earlier debate.
There is a great deal of logic in what the hon. Lady and my hon. Friends have said about the concept of dependency being demeaning to the woman. It implies that she is not a contributor to the pension that is being earned and it is only the man, the breadwinner in this case, who has paid for the widow's pension, whereas the whole argument which women today are trying to express is that a wife's work is of equal value, although it may not be remunerated directly. Many people want it to be remunerated directly. That is why we talk about a home responsibility payment. It is not remunerated directly financially. That is why we have the situation when the man dies that it is assumed that what has been earned by him is cover for his dependants, a cover to which the woman is entitled not as

of right as an individual but only as a dependant.
When that woman becomes a dependant of someone else, to use the words of the Under-Secretary, she becomes "part of the family of the new husband". A new harem is created and she becomes part of the new national insurance seraglio. It is tremendously important that we should ventilate this principle this afternoon and think and argue in the new terms and, therefore, proceed to build a new social security system upon it. In the best occupational pension schemes, as the Government Actuary's report makes clear, the widow's pension cover does not cease on remarriage. I agree with the Undersecretary that that happens still in a minority of cases, but increasingly in future women will see that that is the position in the majority of cases.
I believe it was in the Sunday Times that I read the other day the report of an advertising agency which introduced a far-reaching occupational pension scheme. The top women employees—it was a "top-hat" scheme—were asked whether they would like to join. It would necessitate their making a larger contribution but they would get totally equal rights. The women jumped at it because, as we have argued, women are prepared to pay for equal treatment and to accept equal responsibilities. But then they ran into a snag because they found that the argument about equal treatment cut both ways. The women said "It is all right; we shall pay our contributions", and there was excellent widows' cover in the scheme which would not cease on remarriage.
Then they said "If we are to have equal treatment, it must apply to our widowers." This was another new concept. It was then discovered that under the rules of approval of occupational pension schemes under the Finance Act 1970 such widowers' benefit is not possible. So here is a new field for us to explore and new horizons of equality that we have to enlarge. In passing, I regard it as totally intolerable the way my widower will be dealt with—I shall undoubtedly die first because of overwork—under the superannuation scheme for Members of Parliament. It is intolerable—I having served as long as anyone in this House and longer than most, and having always


paid my full contributions, and my husband having undoubtedly contributed by his forbearance and understanding to my capacity to have a career—that he should be treated in the way he will be.
When hon. Gentlemen die, which I hope they will not do for a long time, their widows will get automatic cover. My husband has to reflect the principle of dependency. He has to have been dependent upon me and or incapable of self-support, a principle which we reject for widows. I resent that. A reform for which I shall fight is the complete equality of widowers' cover under schemes where women contribute equally and play their full part. There should be treatment of people as individuals. We are only just beginning to grasp that idea. I shall not go on longer now on this theme, but it is one on which I feel strongly and to which I shall return on other occasions.
6.15 p.m.
I welcome the fact that hon. Members on both sides of the House have chanlenged this principle of family cover and the fact that a woman can get a widow's pension only until she moves under the family umbrella by marrying again. Whether we should make this a priority is something we cannot decide, because we have no particulars of costs. It is reprehensible that the Under-Secretary, between Committee stage and now, has not made an effort to find what the cost of these reforms might be. If he had a great reforming mind in social security he would have got this information from his office. He would have got the civil servants working on it. But he does not care and he is sunk in the morass of the principle of dependency. We are having a terrible struggle to pull him out of that mud in which he is embedded.
I do not feel prepared today to say that this is the first financial priority, but we have started something by this short debate. We must keep it up and insist on having more knowledge. Above all, we must insist on the Government beginning to think on the lines of the new principle that in social security everyone should be treated as an individual with individual and equal rights.

Dame Joan Vickers: I thank all hon. Members who have supported my amendment and the amendments in the names

of the hon. Members for Wood Green (Mrs. Joyce Butler) and for Bromsgrove (Mr. Terry Davis). I do not think we shall get anywhere tonight. I should get the same dusty answer in the Lobby as I get in the Chamber. In these circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24

CATEGORY A RETIREMENT PENSION

Mr. Meacher: I beg to move Amendment No. 147, in page 35, line 14, leave out subsection (2).
This amendment concerns the half test which was introduced in 1948 when a married woman in employment could rely on her husband's insurance. The aim of the test was to ensure that a woman intended to rely after marriage or remarriage on her own rather than her husband's insurance.
Section 33(2) of the National Insurance Act 1965 states that the number of contribution paid between the date of marriage or remarriage and the attaining of pensionable age must be at least half the number of contribution weeks in that period. A case which illustrates the inequity which can arise under this provision concerns a woman who remarried in 1957 but through ill-health decided to work part-time and finally retired at the age of 60 in 1970. She had not paid for half the number of years between 1957 and 1970, which would be six years. She had contributed for only three years. The problem for this woman is that in the course of her first marriage she contributed for a long period. The test as it stands would disqualify her from her own pension although she had contributed for no less than 33 years.
The Minister said in Committee that he would reconsider whether this test —which is reasonable as it stands, but which is inequitable in some cases— could be adjusted in a way that was compatible with administrative requirements for the great majority of cases. One important requirement is that married women should be much better informed of their position, because the woman to whom I have referred has


found herself in this unfortunate situation because of her lack of knowledge.
I hope, therefore, that the hon. Gentleman has had a chance to consider the matter and will be able to put forward an amendment that will prevent the gross inequity which has occurred in this instance from being repeated in other cases.

Mr. Dean: As the hon. Gentleman said, this matter was discussed in Committee and I undertook to consider the position to see whether any improvement could be made in the arrangements. I think that I can be equally brief because, as the hon. Gentleman said, he is not contesting the half test as such. What he is questioning is the way in which it works for a comparatively small number of women, those whom we would clearly wish to help in every way we can, and the hon. Gentleman quoted one case.
I have considered the position since the matter was debated in Committee. Two broad suggestions were put forward. The one put forward by the hon. Gentleman was to extend the half test to cover periods of all marriages, and I have considered that. The difficulty is that if that were accepted some women would be worse off if they had maintained a full contribution record only during their last marriage. In other words, accepting the proposal would create more problems than it would solve, particularly for women in that category. I hope, therefore, that the hon. Gentleman will agree that that proposal is ruled out on the ground that it would mean that some women would be worse off than they are under the existing arrangements.
The other possibility was that of giving women a choice, and it is potentially quite attractive to give women the opportunity to choose the best of the options from their point of view. I have considered the matter, but the difficulty is that it would literally tie the scheme in knots and have a similar effect on the women concerned. In a sense the hon. Gentleman answered his own case when he said that married women should be better informed about the half test so that they could make a judgment on whether to contribute.
One of the difficulties under the existing arrangements is that, with the best will in the world on the part of the Department, it is becoming increasingly difficult to advise women on the best course for them to adopt. One has to try to assess all sorts of imponderable factors, such as how long they will live in relation to the life span of their husbands and things of that sort. It is difficult for a woman to make a sensible choice about whether it is to her advantage to pay contributions.
If we were to introduce the choice mentioned by the hon. Gentleman, it would virtually be impossible to give women any meaningful advice. A particular scheme, or an option, would be open to married women, but it would be intensely difficult for them to know whether to exercise the option, with the result that the whole arrangement would be brought into disrepute.
I say that with regret, because I genuinely would have liked to have avoided the compartively few but difficult cases which arise—and the hon. Gentleman quoted one. I have had to conclude that, unfortunately, it has not been possible to find an arrangement which is likely to be more satisfactory or more beneficial than the present arrangements to the majority of women in this category.
The Bill goes a little way—I am not claiming that it does more than that— towards meeting the point. It assists women who marry more than once, in that the half test will now not apply to women whose marriage, or last marriage, took place after attaining the age of 55, instead of 57 as at present. I hope, therefore, that the House will feel that that is a modest step forward in a difficult area.

Amendment negatived.

Amendments made: No. 28, in page 35, line 43, leave out from 'every' to 'in' in line 44 and insert:
' 6 days (excluding Sundays) which—
(a) fall'.

No. 29, in line 45, leave out' date 'and insert' day'.

No. 30, in line 46, leave out' date 'and insert' day before that'.

No. 31, in page 36, line 1, leave out from beginning to second 'or' in line 8 and insert:
'(b) are treated by regulations as being in relation to him and his pension days of increment under this subsection,
but only if the number of such days is at least 48; and a day may be so treated by reference to the pensioner or some other person having received, or not having received, benefit of any prescribed description (whether or not under this Act) in respect of that day or a period in which it falls'.

No. 32, in line 21, leave out from 'every' to end of line 24 and insert:
' 6 days which were (or would have been) in relation to him and that pension days of increment under subsection (4), but only if the number of such days is at least 48'.—[Mr. Dean.]

Clause 25

CATEGORY B RETIREMENT PENSION (FOR A WOMAN, BASED ON HER HUSBAND'S CONTRIBUTIONS)

Amendments made: No. 33, in page 38, line 19, leave out from beginning to 'in' in line 20 and insert:
'6 days (excluding Sundays) which:
(i) fall'.

No. 34 in line 21, leave out 'date' and insert 'day'.

No. 35, in line 22, leave out' date 'and insert' day before that'.

No. 36, in line 25, leave out from 'pension' to 'section' in line 26 and insert:
'were days of increment under'.

No. 37, in line 27, leave out 'weeks is at least 8 'and insert:
' days is at least 48 '.

No. 38, leave out lines 32 to 34 and insert:
' 6 days which were in relation to him and his pension days of increment under section 24(4), but only if the number of such days is at least 48 '.

No. 39, in line 45, leave out from 'as' to 'section' in line 6 on page 39 and insert:
days of increment in relation to her for the purposes of any increase of her pension under subsection (10) (b) above, any days after the date of her election and after the date of the death of her husband by virtue of whose contributons she is entitled to the pension,

being days which would, if she were entitled to a Category A retirement pension, be days of increment under'.—[Mr. Dean.]

Clause 31

INCREASE OF BENEFIT FOR CHILD DEPENDANTS

Mr. Meacher: I beg to move Amendment No. 150, in page 43, line 30, leave out subsection (6).
The subsection says that increases in child allowances payable for short-term benefits are not payable to a married woman who is residing with her husband unless he is incapable of self-support. Why should not increases in child benefits be paid to the wife irrespective of the condition of the husband? Is not this provision anomalous in view of the payment to the wife of family allowances under the 1965 Act even when the man is capable of self-support, is acting as the breadwinner and is looking after the family? Is there not a difference in practice in those two parts of the social system? In view of that discrepancy, is it not important to move towards the family allowance procedure which more appropriately represents current social trends?
I appreciate that the existing situation is a long-standing feature of the scheme, but is not this an example of the need to recognise changing attitudes and values towards the rôle and responsibilities of women? Women are not paid for the work they do at home by way of home responsibility payment, invalidity care allowance or whatever it is finally called.
When we debated this matter in Committee the Minister said that as long as the benefit went to one or other parent, that would be all right, and that as long as it went to the breadwinner, whether it was the man or the woman, that, too, would be all right I have two comments to make on that, and I hope that the Minister will deal with them. If that is his view, how does he explain the great furore that has arisen over whether the husband or the wife should get the child credit under the tax credit proposals?
The distribution of income within the family is extremely important, because


in many working-class households there is no sharing, although there is in many middle-class households which have a joint bank account.
This is a point of some substance. It raises again the question of the dependency or independence of married women, and I hope that the Minister will consider it in that context and see whether what has been a long-standing feature of the scheme should be changed in the way that we recommend.

6.30 p.m.

Mr. Dean: No one would argue with the proposition that it is desirable that the wife should have income which she can dispose of herself, but what the hon. Member for Oldham, West (Mr. Meacher) is proposing would have almost the opposite effect to his general aim. The man who is unemployed or incapable of work and entitled to national insurance benefit receives a personal benefit, which is at present £6·75 a week, an increase for his wife of £4·15 a week and increases of benefit for his children which, together with family allowances, where payable, are £2·10 if payable with short-term benefits or £3·30 if payable with long-term benefits.
If the amendment were effected, it would provide an excuse for the bad provider to keep the major share of the benefit for himself and leave his wife to manage as best she could with the benefits she received direct from the Department. The true position is, and has always been, that the benefit received by the husband, although made up from personal benefit and various increases for dependants, togeher with other appropriate additions such as the earnings-related supplement or invalidity allowance, is paid for the family as a whole and is intended to provide resources which the whole family share.
To split the benefit in the way that the hon. Gentleman suggests would tend to lead directly to a situation in which the wife, although she would not have to ask her husband for money, would be receiving less than the share intended for her. I know that that is not what the hon. Member wants, but that would be the effect of his proposal.
In the case of the woman who is left on her own or who has a husband who is

incapacitated, there is no barrier to her receiving the allowances for her children.

Mr. Meacher: The Under-Secretary of State's answer is rather unsatisfactory. He began by saying that he certainly approved the principle that a woman should be in receipt of income which she would be able to dispose of herself. He then tried to make out, however, that if the amendment were accepted a bad provider, as he called him, would keep the benefit for himself. He was seeking to make out, I think, that, if the child benefits were payable by law to the wife, the remainder of the increase in benefit under the short-term benefit procedure would be retained by the husband. There is no necessary connection between those two propositions.

Mr. Dean: It could happen.

Mr. Meacher: The Under-Secretary may say that it could happen, but we are not insisting on the amendment in order to provide the woman with the allowance for the child that she gets in family allowances. We are not making it more or less likely that there will be a sharing of the rest of the benefit payable in respect of the wife.
It is an anomaly under the family allowance procedure that the woman should have the right to the family allowance but that, under the short-term benefit procedure, child allowances are payable to the husband. There is a discrepancy here to which the Under-Secretary has not addressed himself. Presumably, on his argument, we should move over to giving the family allowances to the husband. I am sure the Minister would not agree with that. If he does not, will he explain why we should not have a comparable procedure to short-service benefits, which are in no way necessarily likely to lead to any diminution of benefit for the wife?
Because this is an important matter, because, again, we are bringing up the need to give greater financial independence and autonomy to the wife and the need to make the social security system responsive to changes in social climate, this is an amendment of considerable importance and I therefore recommend my hon. Friends to vote for it.

Question put, That the Amendment be made:—

The House divided: Ayes 158, Noes 176.

Division No. 129.1
AYES
[6.35 p.m. 


Ashlon, Joe
Gilbert, Dr. John
Orbach, Maurice


Atkinson, Norman
Ginsburg, David (Dewsbury)
Orme, Stanley


Barnes, Michael
Grant, John D. (Islington, E.)
Oswald, Thomas


Barnett, Guy (Greenwich)
Grimond, Rt. Hn. J.
Owen, Dr. David (Plymouth, Sutton)


Barnett, Joel (Heywood and Royton)
Hamilton, William (Fife, W.)
Padley, Walter


Beaney, Alan
Hamling, William
Pannell, Rt. Hn. Charles


Benn, Rt. Hn. Anthony Wedgwood
Hardy, Peter
Pardoe, John


Bennett, James(Glasgow, Bridgeton)
Harper, Joseph
Parker, John (Dagenham)


Bidwell, Sydney
Harrison, Walter (Wakefield)
Pendry, Tom


Bishop, E. S.
Hart, Rt. Hn. Judith
Prentice, Rt. Hn. Reg.


Booth, Albert
Hattersley, Roy
Price, William (Rugby)


Bottomley, Rt. Hn. Arthur
Healey, Rt. Hn. Denis
Radice, Giles


Boyden, James (Bishop Auckland)
Houghton, Rt. Hn. Douglas
Reed, D. (Sedgefield)


Bradley, Tom
Hughes, Mark (Durham)
Roderick, Caerwyn E.(Brc'n&amp;R'dnor)


Brown, Hugh D. (G'gow, Provan)
Janner Greville
Rodgers, William (Stockton-on-Tees)


Brown, Ronald (Shoreditch &amp; F'bury)
Jenkins, Hugh (Putney)
Ross, Hn. William (Kilmarnock)


Buchan, Norman
Jenkins, Rt. Hn. Roy (Stechford)
Rowlands, Ted


Buchanan, Richard (G'gow, Sp'burn)
John, Brynmor
Sandelson, Neville


Carmichael, Neil
Johnson Walter (Derby S.)
Sheldon, Robert (Ashton-under-Lyne)


Carter, Ray (Birmingh'm, Northfield)
Jones, Dan (Burnley)
Shore, Rt. Hn. Peter (Stepney)


Clark, David (Colne Valley)
Jones.Rt.Hn.Sir Elwyn(W.Ham,S.)
Short,Rt.Hn.Edward(N'c'tle-u-Tyne)


Clark, David (Colne Valley)
Jones, T. Alec (Rhondda, W.)
Short, Mrs. Renee (W'hampton, N.E.)


Coleman, Donald
Kaufman, Gerald
Silkin, Rt. Hn. John (Deptford)


Conlan, Bernard
Kelley, Richard
Silkin, Hn. S. C. (Dulwich)


Cox, Thomas (Wandsworth)
Lamborn, Harry
Skinners, Dennis


Crawshaw, Richard




Cronin, john
Lamond, james
Spriggs, Leslie


Crosland, Rt. Hn. Anthony
Latham, Arthur
Stallard, A. W.


Cunningham, Dr. J. A. (Whitehaven)
Leonard, Dick
Strang, Gavin


Dalyell, Tarn
Lestor, miss Joan
Strauss, Rt. Hn. G. R.


Davies, Denzil (Llanelly)
Lomas, Kenneth
Summerskill, Hn. Dr. Shirley


Davies, Denzil (Llanelly)
McElhone, Frank
Swain, Thomas


Davies, G. Elfed (Rhondda, E.)
MaGuire, Micheal



Davies, Ifor (Gower)
Mackenzie, Gregor
Thorpe, Rt. Hn. Jeremy


Davies, Terry (Bromsgrove)
Mackie, John
Tope, Graham


de Freitas, Rt. Hn. Sir Geoffrey
Mackintosh, John P.
Varley, Eric G.


Delargy, Hugh
McMillan, Tom (Glasgow, C.)
Wainwright, Edwin


Dell, Rt. Hn. Edmund
McNamara, J. Kevin
Walker, Harold (Doncaster)


Doig, Peter




Dormand, J. D.
Marks, kenneth
Wallace, George


Douglas, Dick (Stirlingshire E)
Marquand, David
Watkins, David


Douglas-Mann, Bruce
Mason, Rt. Hn. Roy
Whitehead, Phillip


Duff, A. E. P.
Meacher, Michael
Whitlock, William


Dunn, James A.
Mellish, Rt. Hn. Robert
Willey, Rt. Hn. Frederick


Dunnett Jack
Mendalson, John
Williams, Alan (Swansea, W.)


Edwards, William (Merioneth)
Mikardo, Ian
Williams, Mrs. Shirley (Hltchin)


Ewinq, Harry
Millan, Bruce
Williams, W. T. (Warrlngton)


Faulds, Andrew
Mitchell, R. C. (S'hamplon, ltchen)
Wilson, Rt. Hn. Harold (Huyton)


Fernyhough, Rt. Hn. E.
Morgan, Elystan (Cardiganshire)
Woof, Robert


Fitch, Alan (Wigan)
Morris, Charles R. (Openshaw)



Fletcher, Ted (Darlington)
Moyle, Roland
TELLERS FOR THE AYES:


Foot, Michael
O'Halloran, Michael
Mr. James Hamilton and


Ford, Ben
O'Malley, Brian
Mr. J. D. Concannon.


Gatpern, Sir Myer
Oram, Bert





NOES


Adley, Robert
Bryan, Sir Paul
Edwards, Nicholas (Pembroke)


Allason, James (Hemel Hempsead)
Butler, Adam (Bosworth)
Elliott, R. W. (N'c'tl8-upon-Tyne,N.)


Amery, Rt. Hn. Julian
Chapman, Sydney
Eyre, Reginald


Archer, Jeffrey (Louth)
Chichester-Clark, R.
Farr, John


Atkins, Humphrey
Churchill, W. S.
Fell, Anthony


Baker, W. H. K. (Banff)
Clark, William (Surrey, E.)
Fenner, Mrs. Peggy


Bell, Ronald
Cockeram, Eric
Fidler, Michael


Bennett, Dr. Reginald (Gosport)
Cooke, Robert
Fletcher-Cooke, Charles


Benyon, W.
Coombs, Derek
Fookes, Miss Janet


Bitten, John
Cooper, A. E.
Fowler, Norman


Biggs-Davison, John
Corfield, Rt. Hn. Sir Frederick
Fox, Marcus


Boardman, Tom (Leicester, S.W.)
Cormack, Patrick
Fraser,Rt.Hn.Hugh(St'fford a Stone)


Body, Richard
Costain, A. P.
Gardner, Edward


Boscawen, Hn. Robert
Critchley, Julian
Gibson-Watt, David


Bossom, Sir Clive
Crowder, F. P.
Gilmour, Sir John (Fife, E.)


Bowden, Andrew
d'Avigdor-Goldsmid, Maj.-Gen.Jack
Glyn, Dr. Alan


Braine, Sir Bernard
Dean, Paul
Godber, Rt. Hn. J. B.


Bracklebenk-Fowler, Christopher
Deedes, Rt. Hn. W. F.
Goodhew, Victor


Brown. Sir Edward (Bath)
Dixon, Piers
Gower, Raymond


Bruce-Gardyne, J.
Drayson, G. B.
Grant, Anthony (Harrow, C.)




Gray, Hamish
McLaren, Martin
Shaw, Michael (Sc'b'gh &amp; Whitby)


Green, Alan
Maclean, Sir Fitzroy
Shelton, William (Clapham)


Grieve, Percy
McNair-Wilson Michael
Shersby, Michael


Gummer, J. Selwyn
Madel, David
Sinclair, Sir George


Gurden, Harold
Mather, Carol
Skeet, T. H. H.


Hall, John (Wycombe)
Maude, Angus
Soref, Harold


Hannam, John (Exeter)
Mawby, Ray
Speed, Keith


Harrison, Col. Sir Harwood (Eye)
Maxwell-Hyslop, R. J.
Spence, John


Haselhurst Alan
Meyer, Sir Anthony
Stewart-Smith, Geoffrey (Belper)


Hastings Stephen
Mills, Stration (Belfast, N.)
Stodart, Anthony (Edinburgh, W.)


Hawkins Paul
Miscampbell, Norman
Stuttaford, Dr. Tom


Hayhoe Barney
Mitchell, David (Basingstoke)
Sutcliffe, John


Hiley Joseph
Molyneaux, James
Taylor,Edward M.(G'gow, Cathcart)


Holland Philip
Monks, Mrs. Connie
Taylor, Frank (Moss Side)


Hordern' Peter
More, Jasper
Temple, John M.


Hornsby-Smith.Rt.Hn.Dame Patricia 
 Morgan, Geraint (Denbigh)
Thatcher, Rt. Hn. Mrs. Margaret


Howell David (Guildford)
Morrison, Charles
Thomas, John Stradling (Monmouth)


Howell, Ralph (Norfolk, N.)
Murton, Oscar
Thomas, Rt. Hn. Peter (Hendon, S.)


Hutchison, Michael Clark
Neave, Airey
Trew, Peter


James, David
Nott, John
Tugendhat, Christopher


Jenkin, Patrick (Woodford)
Oppenheim Mrs. Sally
Turton, Rt. Hn. Sir Robin


Jessel, Toby
Orr, Capt. L. P. S.
Van Straubenzee, W. R.


Johnson Smith, G. (E. Grinstead)
Osborn, John
Vickers, Dame Joan


Johnson, Michael
Owen, Idris (Stockport, N.)
Waddington, David


Joseph, Rt. Hn. Sir Keith
Page, rt. Hn. Graham (Crosby)
walder, David (Clitheroe)


Kellett-Bowman, Mrs. Elaine
Page, John (Harrow, W.)
Walder, David (Clitheore)


Kimball, Marcus
Percival, lan
Ward, Dame Irene


King, Evelyn (Dorset, S.))
Peyton, Rt. Hn. John
Warren, kenneth


King, Tom (Bridge
Price, David (Eastleigh)
Wells, John (Maidstone)


Kinsey, J. R.
Pym, Rt. Hn. Francis
Wiggin, Jerry


Knox, David
Raison, Timothy
Wilkinson, John


Lamont, Norman
Redmond, Robert
winterton, Nicholas


Lane, David
Reed, Laurance (Bolton, E.)
Wolrige-Gordon, Patrick


Langford-Holt Sir John
Rees, Peter (Dover)
Woodhouse, Hn. Christopher


Le Marchant, Spencer
Rhys Williams, Sir Brandon
Worsley, Marcus


Lloyd, Ian (P'tsm'lh, Langstone)
Ridley, Hn. Nicholas
Younger, Hn. George


Loveridge, John
Ridsdale, Julian



Luce, R. N.
Roberts, Wyn (Conway)
TELLERS FOR THE NOES


MacArthur, Ian
Rossi, Hugh (Hornsey)
Mr. Tim Fortescue and


McCrindle, R. A.
Scott, Nicholas
 Mr. Kenneth Clarke.

Question accordingly negatived.

Clause 36

PARTIAL SATISFACTION OF CONTRIBUTION CONDITIONS

Amendment made: No. 40, in page 49, line 25, after 'contribution' insert 1 condition '.—[Mr. Dean.]

Clause 38

ANNUAL REVIEW OF BENEFITS FOR PURPOSES OF UP-RATING

Mr. Pardoe: I beg to move Amendment No. 144, in page 50, line 21, leave out' retained their value in relation to the general level of prices' and insert:
'maintained their proportion of average industrial earnings'.

Mr. Deputy Speaker: With this amendment we are to take also Amendment No. 145, in page 50, line 36, at end insert:
' (c) by how much current rates need to be increased in order to progressively raise the pension for a married couple to 50 per cent.

of the national average of weekly earnings of adult male manual workers in 1980'.

6.45 p.m.

Mr. Pardoe: Amendment No. 144 is coupled with Amendment No. 145, in which we are endeavouring to get the Government to set a standard or at least to consider within their calculation of each annual pension review to what level they are aiming to raise pensions in the long term.
I welcome the Government's conversion to the Liberal policy of a flat-rate State pension with earnings-related occupational schemes topping it up. As the Under-Secretary will know, when he was in opposition I partook in a large number of debates on pensions. In most of them I told the then Opposition that they would eventually come around to this very sensible policy. I was delighted with their conversion when they became the Government.
I am also delighted that the Government are prepared to pay for these flat-rate State pensions by means of earnings-related contributions, but I should prefer a social security tax. Having said that, however, for the flat-rate pension there


has to be a long-term target. I wish to discuss this long-term target in this debate.
Even though we now set a pension and even though, as the Government have now said, we say that we shall prop this up in relation to inflation every 12 months, that is not sufficient. It is by no means the end of pension policy.
In periods of rapid inflation there will still be occasions when the pensioner, in the intervening 11 or 12 months, is losing out on his purchasing power. It was this losing-out on purchasing power during the period of two years under the Labour Government which was the major dissatisfaction of the pensions schemes they produced and which they maintained during their period of office. In a period of rapid price inflation, at a rate of perhaps about 8 per cent. a year, a pensioner whose pension has been raised on 1st January, for instance, to the equivalent level of purchasing power 12 months previously can find that it has lost a great deal of purchasing power within six months.
Even by the Government's standards in maintaining the purchasing power of pensions it might be better, rather than having a review every year, to do what is done in some of our European partners' countries and in Sweden. Instead of saying "We shall review pensions in the light of inflation every 12 months", we should say "We shall review pensions automatically when inflation goes above 2 per cent. or 3 per cent." For instance, in Sweden pensions are automatically reviewed when inflation rises above 3 per cent. In Belgium and Italy pensions are automatically raised when prices rise by 2 per cent.
However, that is not really part of my argument. It would be an advantage and a progression from the Government's present policy, but it would not by any means be satisfactory.
We must start from the basic assumption that the present pension level, even when it has been topped up on day 1 and brought up to its previous purchasing value, is too low. One can see that it is too low by the fact that the proportion of old-age pensioners who are having to have recourse to supplementary benefit is constantly increasing. It increased under the Labour Government and it has

increased under the Conservative Government. As we accept that supplementary benefit level is the poverty line—I suppose that it is the official poverty line—and as many old-age pensioners are having to have recourse to supplementary benefit, in increasing numbers, it follows that the basic flat-rate pension is not enough.
The first Liberal principle on pension policy is that the basic flat-rate State pension must be enough to live on by the standards of our civilised—or otherwise— society. It is simply not enough for the Government to say "We shall review pensions in the light of the cost of living every 12 months, and are we not good to do that", because the existing standard, even when topped up in relation to inflation, is insufficient.
In any event poverty cannot be strictly related to the cost of living. Poverty is clearly related not to actual price levels but to the surrounding economic level and the surrounding standards of living. If it were not, one would have to say that there was no poverty and that there were no poor in this country, because by the standards of the Calcutta pavements we do not have such poverty or such poor. Nevertheless there is clearly poverty in our society, because a large number of people are slipping too far below what our society calls an acceptable standard. Pensioners form a large part of the brigade of those falling below an acceptable standard.
We must look ahead and say what standard we want. Clearly it cannot be in absolutely monetary terms. It is no good saying that the pension for a married couple should be £12 and that we will maintain that through annual upgradings in the light of price rises. In our view £12 is not enough. But even if it were enough for 1973, would it be enough for 1983 or 1993, even if it had been increased by a cost-of-living factor?
In the long term the minimum standard of pension that a civilised, modern industrial society can tolerate for the married couple pension is one based on half average industrial earnings for the manual male worker. Had this country had the good sense and the good fortune to have a Liberal Government since we first made this proposal in 1963—we said then that we would raise the pension level over a


period of 10 years to half average industrial earnings—the position would be much better today—at the end of that decade. That has been Liberal policy for 10 years.
Had there been a Liberal Government in 1963—as there should have been— undoubtedly there would be pensions for a married couple which would be related to the average industrial wage. They would have been brought up progressively to half the average industrial earnings for a male manual worker, which amount now to £36. That means pensions for married couples at something like £18 a week. We stressed in 1963 that this could not be done immediately. It was clearly a matter of switching resources over a long period of time.
We believed that it was very much easier to finance such a scheme—it was an ambitious scheme—through a social security tax, a percentage payroll tax on firms' payrolls paid both by the employer and by the employee. Since that was related to rising earnings the whole thing would have been dynamic, making it possible to finance such a pension level.
In Amendment No. 145 we clearly accept that because the scheme was not started in 1963 and because it has to start now, we cannot bring it to that level before about 1980 and that it would take about six to seven years to bring it to what we would regard as a satisfactory level. Once at that level, it would be specifically related as a proportion to industrial earnings and would maintain its power in that respect.
In his reply, the Under-Secretary may say that pensions have maintained their value as a proportion of average industrial earnings. The latest issue of Lloyds Bank Review for April 1973 has an article by Professor Thomas Wilson on page 2. It has an extremely helpful colour chart which shows that pensions have maintained their proportion of average gross earnings as, indeed, they have kept ahead of retail prices.
We still have to look ahead and say "Are pensions now the proportion they should be of average industrial earnings? Are they sufficient?" We say that they are not. What is a sufficient level? We say that it must be half for a married couple and a due proportion for single

people, and we must bring that standard up over a period of time. We ask that instead of pensions retaining their value in relation to the general level of prices—that is something the Secretary of State will have to consider in his annual review—they should be maintained as a proportion of average industrial earnings. When the Secretary of State is considering what factors to take into account in his annual review, he must consider not only the present but the actual economic conditions of the year that has passed, the price rises and so on. He must look ahead and review the present rates in order progressively to raise pensions to the standard we have set by 1980.
Clearly, if we were to guarantee pensions as I have argued we should, guaranteeing also social security benefits and wages against the food price guarantee, this would be a part of bringing them up. No doubt the Minister will ask how a future Liberal Government will pay for these proposals. [Interruption.] It is no good Labour Members querying this fact. The Liberal Party will be represented in government within the next five years at the very least. We shall be in a position virtually of holding the balance of power and then either Labour or Conservative Members will have to attend to the minimum programmes we shall insist upon. I remind the Labour Party that it is no good shouting and screaming at the idea of Liberals holding power. They will be holding power, and it will take very little more swing for them to do so. Even now there are fewer than two Labour voters for every Liberal voter—

Mr. Kenneth Marks: The hon. Member for Rochdale (Mr. Cyril Smith) has been talking about obeying the Whip. How can the hon. Member for Cornwall, North (Mr. Pardoe) guarantee that his proposals would get through the House?

Mr. Pardoe: There is obviously a difference between those proposals which are matters for Governments to resign on and other matters. We have always made that clear. We have also made clear that the Whip system which forces Governments to resign on every dot and comma of Government policy is nonsense. However, this is off the point and I was


goaded into it only by the interruptions of Labour Members.

Mr. O'Malley: If it is the case, as the hon. Member says, that there will be no Whip system, how will one deal with——

Mr. Deputy Speaker: Order. We had better come back to the amendment.

Mr. Pardoe: I should be delighted to go into this matter at another time.
I was suggesting that the Minister would ask how the Liberals would pay for this proposal. We should do so by a social security tax. We would have to accept a redistribution of income from the younger generation to the old, a greater distribution than the Bill envisages. There is one other way in which it would be paid for. We have put forward in our incomes policy—I have deployed this argument before in the House—a proposal for a tax on inflation. It would be a surcharge on the national insurance contributions for those people who obtain excessive wage increases. The money would be paid into a national insurance fund, from which would come the finance for the increased pensions. These two reforms together, therefore, would go a long way—indeed, the whole way—towards paying for the policies which I am setting out.
What I want from the Under-Secretary is not necessarily a refutation of the figures, not necessarily a statement that the Government do not accept the figure of 50 per cent., but at least and at last a statement from them about their long-term target for pensions standards and an assurance that they are prepared to work towards that target. If that was their target, they would be prepared to accept the amendment.

7.0 p.m.

Mr. Dean: The hon. Member for Cornwall, North (Mr. Pardoe) began by welcoming what he called the Government's conversion to earnings-related contributions and a flat-rate pension. It would not be out of order for me to ask who has been converting whom on this. But perhaps we could jointly help to convert the Labour Party, which does not yet appear to have recognised the value of having a basic pension and then a second pension run in a different way, and that the only fair way in which this could

be financed when the number of pensioners in the population is growing, and will continue to grow, is through an earnings-related contribution.
The hon. Member went on to state his long-term target for pensioners in this country. Our long-term target is also to raise the level of pensions. I entirely accept the point that the hon. Member made when he said that their relationship to earnings had shown very little change over the last 25 years or so, and we are all anxious to see that position altered. It is the combination of the basic pension, plus the second pension, which is a feature of the Bill, plus savings that individuals make in other ways, which is more likely to assist us to achieve this objective.
It is a mistake to concentrate in the long term, as the hon. Member does in his amendment, purely on the basic pension. It is a combination of the basic pension, providing a firm base, and the ability of people, along with their jobs, to raise their own standards through the second pension that I believe will achieve the sort of long-term objectives to which he has alluded.

Mr. O'Malley: The Under-Secretary might be able to get away with the statement that the Government's long-term policy is to bring up the basic level of the pension with Members of the Liberal Party whose attendance in pensions debates on the Bill began only today. They were not represented on the Committee stage. He cannot get away with it with Members of the Labour Party, however. We made a close examination of the Bill in Committee, when it emerged quite clearly—we had the evidence of the Government Actuary's report—that on all the bases proposed by the Government in the Bill there is no possibility of putting up the pension in real terms compared with national average earnings in this country.

Mr. Dean: The hon. Member is wrong in what he says. He has said it before, and I repeat my answer yet again. Through the firm financial base that it provides by way of the earnings-related contributions, the Bill is one of the most effective ways in which we shall be able to raise real standards for pensioners for present and future generations. One of the inhibiting factors in earlier years has been the flat-rate contributions, which have meant


inevitably that, unless the burden on the lower-paid was going to be at an intolerable level, the possibility of improving the real standards of pensioners would be held down.
What we can now say is that, as we move over to an earnings-related contribution, not only will the cost be more fairly spread on a pay-as-you-go basis amongst the working generation, but there will also be buoyancy in the scheme, because as earnings rise so will contributions rise. I share, therefore, the hon. Member's long-term objectives here about raising standards, but I emphasise that it must be done through a combination of the basic pension providing a firm base on which people, with the help of their employers, can provide a second pension for themselves. Occupational pension schemes are already responding to the Bill by improving their arrangements. Now that we are laying down minimum standards they realise how much more they should nowadays be doing to improve the pension arrangements not only for the men but also for the women who work for them, including the women who will eventually become widows.
The hon. Gentleman spoke of the erosion of the value of the pension after the award. That is inevitable in days of inflation, but the annual review, the guarantee that pensioners now have that the level of pension will be examined once a year before the onset of winter, at least gives a guarantee that pensioners have not had before. Although the erosion will certainly take place almost from the day when the pension is awarded, they know that within 12 months that will be put right and that the pension will be increased by at least enough to compensate for the rise in prices during the previous 12 months, and we hope to do better.
There has been a modest improvement in the buying power of the pension in the upratings of 1971 and 1972, and I can say confidently that there will be a real improvement in its purchasing power as a result of the uprating already announced of £1 per single person and £1·60 for a married couple, which is due to come into operation on 1st October. That has gone quite a long way to deal with that aspect.
The hon. Gentleman then said that the basic pension was not enough to live on, and that the aim must be to raise it to a level which will be enough to live on. He stated his own target, but, even on his own definition of adequacy, that target, expensive as it would be, would still not be enough to live on for pensioners who had inadequate other resources or who had to pay high rents or rates. Even with the fairly ambitious target that the hon. Gentleman has set, he will not achieve his objective of lifting everybody above the basic level of supplementary benefit.
The hon. Gentleman knows very well the dilemma—certainly this side of tax credit, which will help in this area— if we raised the level of the basic pension and tried to get people off supplementary benefits. We could raise the level of the basic pension and hold down the level of the supplementary benefits. That is one way in which we could get people off supplementary benefit, but it is not a way that any hon. Member would like, because it would be at the expense of the worst-off, those who are most dependent on the supplementary benefit level being raised as well. By putting in more money and holding down the level of supplementary benefit, one would ensure that the additional money went to the better-off pensioner and not the worst-off, those who need it most.
It is for that reason that Governments of all political colours—I suspect that a Liberal Government would have taken the same attitude in the circumstances— have felt obliged to go on raising the level of the supplementary benefits broadly in parallel with the level of the pension. That has meant that a growing proportion of pensioners have relied on the supplementary pension to increase their basic pensions. Tax credit will make a substantial improvement, although it will not entirely solve the problem.
The hon. Gentleman then mentioned cost. He was very right to do so, because we are speaking about considerable figures. He said that the answer is to have a social security tax to meet the substantial additional bill. But, whatever we call it and however we raise the money, the fact is that that bill must be met partly by industry and commerce.


and, therefore, the increase will be reflected in costs and prices. It must also be met partly through the contributions of individual people, and the higher those contributions are, the greater the pressure for wage increases. Then we are into the dreary round of both price and cost inflation, which has been the curse of the pensioners for so many years. There is no panacea here. A social security tax would not deal with the basic problems of costs and wage claims.
When one is understandably criticising the level of the pension, the other factor to be taken into account is that the proportion of elderly people in our community continues to grow. The pattern will continue until the 1980s. As a result, a greater burden must be borne by each wage-earner. The community accepts that; it is our return for the way in which the pensioner generation has built up the prosperity of the country. But we cannot ignore the effect that that will have on wages and prices.
There is no easy answer in the way that the hon. Gentleman proposes. Therefore, I cannot advise the House to accept his proposal. I think that he put it forward more for a debate to air the subject than for any other reason.
The Government are committed, through the annual review of the basic pension, to ensure that that pension is not eroded, and that if possible its real value is increased. Over and above that, we are committed through the Bill to the concept of a second pension, an earnings-related pension that goes with the job. We believe that a combination of those two things will improve the standards and prospects for present pensioners, but, above all, for the next generation of pensioners.

Mr. David Steel: The Under-Secretary ended by suggesting that our proposal in a sense threatened the very prosperity of the country. He must surely accept that several of our European neighbours manage at the same time to have a higher level of prosperity than we have and to pay much higher pensions.
Although we have listened with close attention to the hon. Gentleman's speech, we remain divided from him on two basic principles. First, he is unwilling to have

written into the Bill any form of progressive or elevating targets. The review specified in Clause 38 still takes as its starting point the current rates as fixed and then makes adjustments. We should like to see written into our pensions legislation an obligation on the Government to move forward from levels determined in the past and try to raise their objectives for the flat-rate pension. That is the first and major difference between us.
The second is on the question of the yardsticks to use in moving towards the targets. The emphasis in subsection (3) is very much on using the general level of prices as a target. Only lower down in the subsection is there a reference to the general standard of living of the country.
We have asked, and will continue to ask, for pensions increases to be related to average earnings rather than movements in prices, because, as the Government have kept saying in other contexts in recent months, earnings have risen faster than prices. We are anxious to secure that the pensioner takes a share in the increased prosperity, in the increase in general living standards, rather than being pegged down—although that is an extraordinary analogy to use—to the increase in prices when earnings are increasing faster. Obviously, we shall have to pursue the argument on other occasions.
We have noted the concern of the Opposition spokesman, the hon. Member for Rotherham (Mr. O'Malley) about there being no Liberal representation on the Committee that considered the Bill, and in view of that concern we look forward to an offer of a place from the Opposition allocation the next time a similar Bill is introduced. It would give us a much greater opportunity.
In the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.15 p.m.

Mr. Dean: I beg to move Amendment No. 41, in page 53, line 2, at end insert:
'and where the Secretary of State determines that he is not required by subsection (4) above to lay a draft order, and also determines not to lay a draft order in pursuance of subsection (11), he shall lay before each House of Parliament, with his report under subsection (10), a


copy of a report by the Government Actuary on the consequences for the Fund which may, in the Actuary's opinion, follow from those determinations'.
This amendment deals with the benefit equivalent of Amendment No. 14, which dealt with contribution reviews. It follows from a point made by the Opposition in Committee and introduces a requirement for a report by the Government Actuary if, following his review of benefits in any particular year, the Secretary of State decides to make no proposals for benefit increases. As the Bill stands, a Government Actuary report is not required in these circumstances.

Amendment agreed to

Clause 39

CROWN SERVANTS, ARMED FORCES, ETC.

Amendments made: No. 42, in page 54, line 4, leave out 'Part of this '.

No. 43, in page 54, line 6, leave out from 'or' to 'in' and insert 'under this section'.

No. 44, in page 54, line 8, leave out from 'person' to end of line 10.

No. 45, in page 54, line 11, leave out 'any prescribed exceptions' and insert:
'the following provisions of this section'.

No. 46, in page 54, line 12, leave out from 'of' to 'shall' in line 13 and insert 'Her Majesty's forces'.

No. 47, in page 54, leave out lines 21 to 27.

No. 48, in page 54, line 42, leave out from 'this' to end of line 44 and insert:
'Act, Her Majesty's forces shall be taken to consist of such establishments and organisations as may be prescribed, being establishments and organisations in which persons serve under the control of the Defence Council'.—[Mr. Dean.]

Clause 43

THE NATIONAL INSURANCE FUND

Amendment made: No. 49, in page 57, line 28, leave out from 'any' to end of line 30 and insert:
'such manner as may be specified by an order of the Treasury for the time being in force under Section 22(1) of the National Savings Bank Act 1971'.—[Mr. Dean.]

Mr. Dean: I beg to move Amendment No. 50, in page 57, line 34, leave out 'Where' and insert:

'There shall be made out of the National Insurance Fund into the Consolidated Fund, or out of money provided by Parliament into the National Insurance Fund, such payments by way of adjustment as the Secretary of State determines in accordance with any directions of the Treasury to be appropriate in consequence of the operation of any enactment or regulations relating to the repayment of offsetting of benefit or other payments; and where in other circumstances'.
This amendment repairs an omission in the Bill as it stands. It inserts in Clause 43(6) a provision about financial adjustments between the National Insurance Fund and the Consolidated Fund on account of repayments and offsets of benefits wrongly paid. The current provision is in Section 7(4) of the National Insurance Act 1970, which the Bill repeals. The amendment follows the form of Section 7 (4).

Amendment agreed to.

Mr. Dean: I beg to move Amendment No. 51, in page 58, line 4, leave out subsection (7).
This amendment removes from the Bill the provision in Clause 43(7) which says that any sum due to the National Insurance Fund is to be recoverable by the Secretary of State as a debt due to the Crown. This provision was repeated from the present legislation, but it is not necessary because contributions under the Bill, and repayments of benefit which has been overpaid, will no longer be due to the National Insurance Fund but will instead be due to the Secretary of State. Debts due to the Secretary of State are debts due to the Crown and may be recovered by civil proceedings, where necessary, without any special provision. Clause 43(7) is therefore redundant.

Amendment agreed to.

Clause 47

THE COMMITTEE AND ITS FUNCTIONS

Sir Brandon Rhys Williams: I beg to move Amendment No. 52, in page 61, line 20, at end insert:
'(ii) shall, within ninety days of the passing of this Act, refer to the Committee for consideration and advice the question of what amendments are needed to the law relating to social security to meet the special needs of chronically sick and disabled persons (including categories of such persons not at present entitled to benefit under this Act), and notwithstanding any other provisions of this section shall lay the Committee's report before Parliament on or before 30th April 1974 or


such later date as may be approved by resolution of each House of Parliament; and'.
We have already had an interesting debate about disability. It would be inappropriate to take up too much of the time of the House in dealing with this relatively unimportant clause, which concerns the functions of the National Insurance Advisory Committee. It is dealt with in the Bill in Clause 47 and in Schedule 12.
The National Insurance Advisory Committee is competent to deal with problems arising under Part I of the Bill. That includes the whole of the national insurance scheme and, in particular, invalidity benefits, benefits for dependants and unemployment benefits, all of which are relevant in different ways to the question of disability. We need to study the two aspects of the ways in which we could assist the disabled. We should look at flat-rate benefits, which it might be advantageous to consider as continuous benefits under nation insurance. They are of the same character as the attendance allowance, which was brought in by this Government and the tax credits which are foreseen in the Government's Green Paper.
The problems that arise where flat-rate benefits are the appropriate benefit concern tax treatment—namely, whether they should be paid irrespective of income or whether they should in some way be related to a contribution record. The example of the attendance allowance is a good one in that it was decided that it should be paid in relation to the status of the person concerned, rather than the means of that person, his contributions record or liability for income tax.
The considerations which we must bear in mind in thinking of handicap allowances are those which concern people disabled from childhood and also the category of need to which the Disablement Income Group has drawn the attention of the House on a number of occasions— namely, the disabled housewife.
We should also consider another category of benefit for the disabled; namely, earnings-related benefits. They should be seen as more of an insurance character, to assist financial rehabilitation after the disaster of injury to somebody who set out as an able-bodied man or woman. The object of earnings-related benefits for disability is the maintenance of continuity of spending power.
My right hon. Friend, in the earlier debate, spoke of the force of the lobby that now exists outside and inside the House. It is true that right hon. and hon. Members are fully seized of the tragic problem of disability and the extent of the problem which is in our midst. It is undeniable that the mood of the House and of the country is that there should be rapid progress in bringing benefit to the disabled. In recent debates on the subject many hon. Members—and I include myself—have been somewhat at a loss to know precisely what to recommend should be done. That is because the subject is so vast and causes so much concern. The House needs facts and specific recommendations from expert analysts.
I should like to see answered the following questions. First, what is the target and what will it cost? Second, what are the numbers and how will they be assessed? Third, what has been done in other countries and what can be learnt from what other countries have done? There is a real need for a consultative document on disability. In such a document the Government could give the House, albeit tentatively, specific recommendations and guidance as to the ways in which the problem of disability could most fruitfully be tackled.
I recognise that there is a danger that a Green Paper might raise false hopes in view of the very large cost of dealing with disability in a way which the House would like. Therefore, we must be practical and consider what already exists. That is why this amendment is looking at the national insurance system, to see how it could be improved in the interests of the disabled.
I have done a little research into the functions of the advisory committee and its activities. It is dependent for its work on the problems that are referred to it by the Secretary of State. I put down a question a few weeks ago on this subject and my right hon. Friend kindly provided in the OFFICIAL REPORT a list of the subjects which the committee has considered since 1970. It constituted rather dull fare for such expert advisers. The committee included, until his recent death, Professor Titmuss. I had the pleasure of knowing him slightly. I recognise that to replace him will not be an easy matter.
Among the specific provisions in Schedule 12 concerning the advisory committee are that it should include at least one person with experience of work among the chronically sick and disabled. It seems to me that it would be particularly appropriate for the committee to turn its mind now to the problem of disability and come forward with a recommendation about the way in which national insurance could be improved to help the chronic sick and disabled.
The committee is empowered under Schedule 12(6) to appoint persons as advisers. This might well be the way in which, if it felt that it was not competent to tackle so broad a subject, it could bring in experts to constitute, as it were, a separate sub-committee to deal with the questions which the clause requires the Secretary of State to refer to the committee. I believe this amendment would be a small but useful step towards a specific reform in an important part of this huge subject.

Mr. Alec Jones: I support the amendment. As the hon. Member for Kensington, South (Sir B. Rhys Williams) has said, it is supported by hon. Members on both sides of the House. It is necessary because the Bill, a major piece of legislation, contained nothing new for disabled people. Yet all of us genuinely believe that there is urgent need to improve the lot of the disabled—by whom we mean the disabled housewife, the person disabled early in life who never goes out to work, and the person who is disabled during his working life and is forced into premature retirement. This group of people believed that it was reasonable to expect something for them in a social security Bill.
But so far, to these people, their families, the organisations advocating improvements in disability cover, and to hon. Members, the Bill has been a disappointment. That is one of the reasons for this type of amendment. Unfortunately, we have to accept that we are not likely to get any immediate action written into the Bill. Therefore, we believe it necessary to have the detailed inquiry which the amendment refers to by April 1974. We should then have some report indicating the action needed to supply the needs of the chronic sick and disabled.
To many of us, the Bill provided a golden opportunity to do something for these people, but the opportunity was wasted. I believe that this amendment gives the Government a chance to retrieve something from the non-event of this Bill in the interests of the disabled people.
The right hon. Gentleman may feel that I am too harsh in my criticisms and that I might have been somewhat unfair. He may talk of the significant improvements, as well he might, in other ways and in other measures dealing with the chronic sick and disabled. I accept that there have been improvements in the treatment of the disabled. The Undersecretary of State and I crossed swords on this issue in Committee and have rehearsed the arguments on many occasions. There have undoubtedly been certain improvements, but the major improvements —invalidity benefit and the attendance allowance—first appeared in July 1961 in Cmnd. 4124. Since then there have been upratings and the attendance allowance has been extended. But the major steps forward which we have taken in recent years are now four years old. I believe that the country at large feels that it is now time for a further stride forward in our provision for the chronic sick and disabled.
7.30 p.m.
The amendment has been signed by a large number of hon. Members who are, in the main, supporters of the Disablement Income Group. We believe the amendment is necessary because the amendments which we put forward in Committee and which came from the DIG were rejected. The Government may say that they did not reject them completely. The Under-Secretary of State said that he was not excluding any of them. He said that he would listen to our point of view and consider the amendments. Unfortunately, he was unable to accept them. Now is the time for a little extra action and not words.
In Committee the Government rejected any amendment which sought partially or completely to implement the aim of the DIG for the creation of a national disability income. We made three types of approach. First, we sought to achieve some disability income for the disabled inside the basic scheme. We could get nowhere on that, despite all the words about "feeling our way forward" and


"pushing the frontiers forward". We heard all that on so many occasions. I will not go over them again.
Secondly, we tried to do something inside the occupational pension scheme for the disabled. Our attention was drawn to the fact that other European countries are able inside their schemes to make some provision for a disability pension. On that occasion, despite some great sounds of support, we were told that this was not the place to do it and that it was unfair to place any additional obligation on the occupational pension scheme.
Thirdly, we came back to base one and tried to write some suitable provision into the State reserve scheme. Then we were told that with the 4 per cent. contribution demanded we should give first place, as it were, to personal pension and widows' cover. I felt sorry about that, because if we could have provided some sort of disability pension inside the State reserve scheme it could have acted as a base for the occupational pension scheme itself. Despite the fact that we achieved nothing, the amendments proved of value to all members of the Committee. They showed that there was considerable sympathy and understanding on both sides of the House for the disabled.
Certain difficulties in establishing such a disability pension came to light, and it is no use pretending that they do not exist. It was obvious that no occupational pension or State reserve scheme, for example, could provide cover for non-contributors. We were forced to consider the problems—and at some stage the House will have to answer it—that if we rigidly insist on a contributory system it means that there can never be any cover for the non-contributors—the housewife and the non-worker. This led us to the suggestion, which came from both sides, that the Government should publish, not today but in the near future, a Green Paper showing possible ways forward, analysing the problems and showing the various options available to us in coming to a decision.
Even inside the organisations working to establish a disability pension there are considerable differences of approach, but I believe that the longer the Government delay making some sort of announcement or showing the way

forward the more these difficulties are likely to increase and not decrease. At the end of the day the House will have to make a political decision. We shall have to ask the general public: Are we, the fit people, prepared to pay to give a decent pension to the disabled and the chronically sick?
I do not seek to make a party political point. We know the thinking of the Conservatives, and I want to place on record the Labour Party's view. I quote from Labour's "Programme for Britain":
The aim of a Socialist policy … must be to provide financial support as of right, even for those with no insurance qualifications…. Two types of benefit are therefore needed. First, the existing attendance allowance must be extended to provide better grading according to the degree of disability. Second, a benefit must be paid to all substantially disabled adults during normal working years, regardless of previous insurance record.
Yesterday, the Secretary of State said that he was thinking about conducting a thorough review. I hope that the possibility of a thorough review will not be used as an excuse for delay.
I summarise my views and my reasons for supporting the amendment. First, there was bitter disappointment among disabled people that the Bill contained no provision for them. Secondly, there is a growing feeling almost of shame at what we have managed to achieve for our disabled people. Thirdly, there is a mounting determination in the House to do something.
The amendment is reasonable. It shows the way forward for the examination of possibilities. If this Government or the next Government will not act to help the disabled, back benchers on both sides will have to force them to do so.

Mr. Hugh Dykes: I apologise for having missed the initial remarks of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams). I congratulate him on moving the amendment, and I shall not detain the House long in adding to the support that has been given from both sides of the House to the spirit of the amendment.
Although I am not an expert in the technicalities of this subject and have not participated in the previous stages of the Bill, I have a sense of disappointment that the Bill contains no formalised provisions for helping registered disabled


persons. It is long overdue in the historical context of the social progress in helping particular classes of needy and of the ever-increasing urgent need to deal in a much more energetic, comprehensive and national way with the special needs of the disabled.
It is trite but none the less valid to say that many years ago people thought that universal education over the age of 12 was undesirable and even revolutionary and that a universal old-age pension was a curious concept, to say the least. We have made progress, and I believe that within a few years a national disability income scheme will be regarded as entirely automatic as well as by definition desirable. Whatever are the technicalities that have to be overcome and whatever the complexities, which are great, such a scheme will inexorably come, and it will be regarded as an automatic right, as are many other elements of social progress. The House should give an expression of opinion on that concept.
Without being presumptuous, I say to my hon. Friend the Member for Kensington, South—who is an expert on this subject—that I am not espousing every word of his amendment. I support the spirit of the amendment. The way in which he seeks to approach his objective may not be the right way. There may be other ways of doing it. I am not sure that the framework of the committee is the most appropriate way of conducting the initial public examination.
I pay tribute to my right hon. Friend the Secretary of State for the great work he has done for the disabled and to his Department for its work behind the scenes.
It is easy for us to jump to glib conclusions about doing something immediately and saying that it will be easy. That is not true; it is an extremely complex subject. All I ask my right hon. Friend to do to-day is to take one step further and to say that the Government are proceeding along this road. In due course the House will come to regard this concept as necessary and anything less as inadequate.

Mr. R. C. Mitchell: I, too, am disappointed that the Government have not taken the opportunity to take another step forward in helping the disabled. As the hon. Member

for Harrow, East (Mr. Dykes) said, ultimately we shall have a system of national disability income. The only question is how quickly it will come.
The hon. Member for Eastleigh (Mr. David Price) and I recently attended a meeting of our local Disablement Income Group. We both expressed the view that a national disability income was coming. The inevitable question from the audience was: how soon will it come? We both scratched our heads and answered out of the air that we hoped it would be within five years. The audience were horrified and thought that it should come much sooner. Knowing how Governments have to work gradually to squeeze money out of the Chancellor of the Exchequer, I should be reasonably happy to achieve a national disability income within five years.
We then told the audience that we did not want to stand still during the next five years and we asked what they thought should be the next priority. There was almost general agreement among the audience that the next step must be a special arrangement for disabled housewives. It was agreed that that was the most pressing problem.
In view of the extreme modesty of the amendment, I hope that the Secretary of State will be able to accept it. It provides for the National Insurance Advisory Committee to look at the whole problem and to put forward a report by 30th April 1974. I hope that the committee will consider the next steps forward and put them in order of priority until we reach our objective.
If we accept this amendment, many disabled people who are disappointed that there is nothing for them in the Bill will be given new hope. They will see that something is happening. It is very important for the disabled to know that people are thinking and caring about them—both Governments and Oppositions. If they come to realise that there is a body actively engaged in working out priorities and considering the next steps, by accepting the amendment this House will give them new hope.
My hon. Friend the Member for Rhondda, West (Mr. Alec Jones) said that this was an issue on which back benchers on both sides of the House should assert themselves. We are not asking the Government to spend large sums of


money which Ministers will not be able to get out of the Treasury. We are asking them to give a special job to the National Insurance Advisory Committee. It would not cost very much. If the Government advise the House to reject the amendment or some similar proposal, I hope that it will be pressed to a Division and supported by right hon. and hon. Members on both sides.

7.45 p.m.

Mr. John Hannam: I, too, support the amendment. I am impatient to see the culmination of the rapid progress which has been made by the present Government towards the introduction of a full disability allowance. I was very disappointed to find that the Bill did not contain provisions for an invalidity pension for people disabled before retirement age.
I appreciate the argument against using the Bill to introduce measures of this kind. However, I feel that the fullest possible investigation should be conducted into the plight of the disabled and handicapped who, through total or partial disability, cannot earn normal wages and canont face the extra charges for clothing and various equipment which they need because of their disability.
A tremendous amount of work for the disabled has been done by my right hon. Friend the Secretary of State in a very short time, with the attendance allowance and the invalidity benefits, which are of great help. But they do not assist the mass of handicapped people who try to manage their homes and their lives without falling back on to supplementary benefit. I have in mind especially disabled housewives, the partially disabled and the early retirements, quite apart from the lack of mobility which prevents disabled housewives from shopping around and the lower incomes which the disabled have to accept and which prevent them from enjoying the standard of life which they would like to have for their families. All these factors need quantifying and bringing into focus by experts, and the advisory committee is an ideal means of dealing with the problem.
I recall hearing my right hon. Friend addressing the Disablement Income Group conference back in June 1971. He spoke of the work being launched towards defining a strategy for the dis-

abled. He made no false promises. But he undertook to carry out a study of European systems, and throughout his speech he underlined the awareness of the need for some kind of general disability allowance. I hope that we are now moving rapidly closer to this form of pension.
This amendment having been moved, I ask my right hon. Friend to give it sympathetic consideration. I hope he will accept it or at least that he will consider ways in which we can move to this last step in helping the disabled. I look forward to hearing my right hon. Friend say what he plans for the future. I urge him to accept the amendment.

Mr. Caerwyn E. Roderick: I intervene only briefly, although there are many different sections of the disabled of whom I would like to speak, including disabled housewives. For example, in my view we ought to investigate what further use might be made of Remploy and how its services could be extended to help the disabled.
Instead, however, I shall concentrate my remarks on how the attendance allowance is working out in practice. There cannot be one hon. Member who has not received complaints from constituents about the inconsistencies in the payment of the allowance. People can see cases where the allowance is being made, and they cannot understand why they are not covered for children or other people whom they look after. General practitioners do a good job in trying to assess whether people qualify. But there are inconsistencies between one GP and another. They bring a judgment to cases that is not consistent throughout the country. It is not even consistent in the same area. The Secretary of State will say that there is recourse to appeal and that a second GP may be brought in. However, that second GP may practise in the same locality, and he may well be loth to contradict the opinion of the original doctor.
Then there are cases where people are disabled but where doctors may not very often be called upon to see them. They may not be ill in the sense that a doctor is required. I know of a mongol child who is seldom ill in the sense of requiring a doctor. But health visitors and social workers are constant visitors. I suggest that the advisory committee


might well look at the possibility of bringing in these people to make assessments, in addition to doctors. They might be used to give advice. That is one aspect which the advisory committee might review.
These measures may well become necessary fairly soon in view of the accumulation of cases. The public is incredulous about the implementation of the allowance, and I cannot see any reason for delaying the matter. Most doctors will want to get all the assistance and advice they can have.
I urge the Secretary of State to accept the amendment, if only so that the advisory committee can look at this aspect.

Mr. Edwin Wainwright: When I first looked at the amendment I thought that the hon. Member for Kensington, South (Sir B. Rhys Williams) had the full agreement of the Secretary of State to it. It is a rather mild amendment. I can only assume that the Government are afraid of something in it. However, I cannot find it.
The amendment says that due consideration shall be given to changes in the law. If we do not accept it, the hopes of many thousands of people will be shattered simply because they have looked forward to something extra coming out of the Bill.
We all know of people who are chronically sick or disabled. I have a constituent who, ever since he was first able to sit up as a baby, has only left his chair to be placed in bed. The Spastics Society, which is doing a wonderful job voluntarily—and every praise to it—is organising work on behalf of such people. However, that should be the duty of the Government.
My constituent is now in his 40s. He is employed, this having been organised by the Spastic Association, and gets 15p a day. He is away from home for between eight and 10 hours. The only income he gets, apart from the 15p a day, is supplementary benefit. There is no hope of his enjoying a reasonable standard of living. It is a credit to most of these people that they are so cheerful. They make me feel ashamed if I am a bit sad and sorrowful because of a little upset or a little pain here or there or because of some small calamity which may have occurred.
I get a little tired of being told by the Government that we are moving forward. That phrase comes from the Government side so often, as does the claim that they have made further progress than the previous Government. We must look at the problem as it is and not in terms of what has happened in the past. Let us look to the future. I know that the Secretary of State is kindly disposed to the purpose underlying the amendment, and I hope he will look upon it with favour and accept it. If he does not accept it, there will be sadness in the hearts of those people whom we profess and desire to look after and for whom we say we care.

Sir K. Joseph: Whatever may be the appearance to the contrary, it is far more enjoyable for Ministers to accept amendments than it is for them to resist them. The atmosphere improves and time is not spent in controversy. When there is an amendment which, as the hon. Member for Dearne Valley (Mr. Edwin Wainwright) has said, is as mild as this one and it has been so constructively moved by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) it is a great shame that I have good reason to advise the House that it is not the right vehicle for progress. The disabled ought to be glad that their cause has been put so vigorously and so sensibly espoused by several Members in what has been a rapid debate. I refer to my hon. Friends the Members for Kensington, South, Harrow, East (Mr. Dykes) and Exeter (Mr. John Hannam) and the hon. Members for Rhondda, West (Mr. Alec Jones), Southampton, Itchen (Mr. R. C. Mitchell), Dearne Valley and Brecon and Radnor (Mr. Roderick). There could have been 10 or 20 times as many speeches from hon. Members with the same spirit and purpose. We have to deal with the amendment. The National Insurance Advisory Committee is a highly respected and extremely expert body that has done notable service to the country since it was set up, but it has never been given an immensely wide remit with political implications—I do not particularly mean party political implications—such as the amendment would hand to it. Nor has it been given the job to do something which is primarily the Government's duty.
In considering the disabled we are not dealing with some immensely expert field


which needs prolonged study by a high-powered and specially chosen commission. We are dealing with a vast range of interrelated and overlapping problems affecting almost every aspect of government which the Government, given the mind, can sort out into a series of sensible priorities. This is what we have set in hand. If we passed the job of preparing policy to the advisory committee it would have to start from scratch whereas the Government started some time ago. Each Government inherit from their predecessor the work which is in hand—as we inherited the thinking on the attendance allowance.
However, I took an early opportunity to go before the DIG in April 1971 and make a speech modestly entitled "Notes towards the definition of a strategy towards the disabled". In that speech 1 said, among a number of other things, that we had then and there set in hand a whole range of studies necessary for the preparation of a policy and that we had laid on a visit to Europe in the light of the exposure by the DIG of the much better conditions for the disabled in some parts of Europe. Now it is two years later, and a few days ago I was again in front of the DIG, receiving a vigorous and slightly less warm reception than two years previously because of the rising tide of impatience, of which all hon. Members are aware.
8.0 p.m.
I can report that the visit to Europe has taken place, a study has been produced on the lessons to be learnt, and studies announced in 1971 are either complete or nearing completion. We have gained much experience from the implementation of the attendance allowance and the invalidity package, and we have set firmly in hand a comprehensive study of the priorities in our policy for the disabled. I was attracted by the speech of the hon. Member for Southampton, Itchen in which he recognised that with the maximum good will there are competing claims on the economy and that there has to be a system of priorities both between the disabled and the other claimants and among the disabled themselves. That is the way that the Government are tackling the problem.

Mr. Meacher: The right hon. Gentleman has said that he had been at this job for two years whereas NIAC would

be starting from scratch. He will have observed that the amendment commits NIAC to completing its review by 30th April 1974. Is he able to give an assurance that he will complete all of these studies by that date?

Sir K. Joseph: I am coming to that. Without any disrespect to my hon. Friend the Member for Kensington, South—it is rather a matter for congratulation—he and other hon. Members have found an ingenious peg on which to hang a short debate on the disabled. I want to answer it without any disrespect to NIAC by explaining that that particular peg would not be a runner—if pegs can run.

Mr. Edmund Dell: These days pegs crawl.

Sir K. Joseph: I am grateful to the right hon. Gentleman.
Before I deal with the main points I should point out to the hon. Member for Brecon and Radnor that on an earlier amendment we discussed the very criticisms of the application of the attendance allowance that he raised. If he has particular cases in mind, would he be kind enough to write to me or the Undersecretary?
The substance of the proposal by my hon. Friend the Member for Kensington, South was that if we could not accept the NIAC amendment the Government should announce that they would work towards a Green Paper. Having produced a mental handicap White Paper and having committed the Government to produce a mental illness White Paper, I am not averse to a policy on a Green Paper. I am not, however, convinced that it would be a sensible commitment to make at this point.
First of all, a Green Paper implies that we have sorted out a whole range of problems, whereas it may be quicker, and here I take up the point of the hon. Member for Oldham, West (Mr. Meacher), to define as quickly as we can those things which need priority in themselves and which we can do without damaging the middle-term strategy, rather than spending our efforts in defining a total strategy which will inevitably be to the disadvantage of more immediate action.
I understand the impatience. The very fact that benefits have been provided as historic novelties in this country has aroused the expectations and impatience


which were previously suppressed. The Government have to face this impatience. In the interests of the disabled and of the Government it is important that we should try to take another step as soon as practical. That is desirable because we as a Government want to do it and because it fits in with the Government strategy of improving the social services.
I would rather commit myself to working as hard as the Government can on the survey with a view to producing priorities that can be offered to the disabled than commit myself to a comprehensive Green Paper. I hope that my hon. Friend feels that, despite my short speech, I have dealt with his amendment, even though I now ask him to withdraw it——

Mr. Alec Jones: Will the right hon. Gentleman deal with this aspect? It seems that many organisations like the DIG are appreciative of the small steps we are taking one at a time but that they, like me, are suspicious that without some broad statement about the ultimate end we shall not know where we are going or how soon we are to get there. There is the need for some broad strategy.

Sir K. Joseph: I understand that, although I think that broad strategies unfulfilled carry less conviction than a succession of fulfilled steps. I ask the House to appreciate that some of these matters which seem so relatively easy are extremely difficult when they are examined in detail. Even the DIG has its own internal differences about how to tackle various facets of the problem. Hon. Members are apt to forget that the elderly comprise by far the greatest proportion of the disabled. They involve some different considerations. The task the Government face in sorting out a consistent strategy which will allow successive, progressive implementation without intolerable unfairness as between one group of disabled and another is not something that can be achieved overnight. It is one to which the Government are deeply dedicated. I hope that my hon. Friend will not press his amendment.

Mrs. Castle: I have been listening to this debate in the confident assumption that any contribution from me would be

superfluous. When I saw this amendment, which has rightly been described as modest, with such a phalanx of names of Conservative Members attached to it, I thought it was one of those signs with which we are familiar indicating that it had all been arranged. Conservative Members are not exactly notorious for rebellion, and I thought that this massive support, which if carried into the Division Lobby could defeat the Government, would not have been expressed on the Notice Paper unless there was some inner reassurance that the Government would accept the amendment.
Why not? It commits the Government to nothing but the production of information. I was totally astonished to hear the Secretary of State's reply. He apologised for its brevity. He need not have done that. Brevity is the soul of popularity in this House. He also laid astonishing claim to its sincerity. I do not know about Conservative Members, and I have certainly no intention of making a party political point as I thought that I was here merely as a claque to applaud the victory of Government back benchers, but as I listened to the right hon. Gentleman I felt mounting within me the feeling that this will not do. I say that recognising that there is validity in the right hon. Gentleman's argument that NIAC may not be the correct instrument for this survey and report. I could have accepted that as a substantial point had there been some alternative put forward. Everyone knows that the real crux of the amendment lies in the commitment to a date. Indeed, when one of the right hon. Gentleman's supporters said that he had heard him making a moving speech to the DIG annual conference in 1971, I felt that that was final proof of the need for this House to tie the right hon. Gentleman down to a date. After all, we are already in 1973 and he is still sympathetically thinking of all the difficulties about a strategy for the disabled, about a definition, and how we could latch them into a national insurance scheme. Yet today he says that it is premature to commit the Government to a report on this subject by April 1974.
I believe that I reflect the true feeling in this House when I say that we will not tolerate that continued lethargy. I am prepared to accept administrative difficulties and an argument about priorities, but the tabling of this amendment was an indication that hon. Members on


both sides of the House want the creation of a disability income to be one of the priorities. If the right hon. Gentleman rejects a request even to produce a report in April 1974 on the ground that we must still think about our priorities, I suggest that he is rejecting this matter as a priority. I call on hon. Gentlemen opposite to recognise that basic fact.
I regret very much that hon. Gentlemen opposite did not help the Committee to make the Bill the commitment for a starting date. As has been pointed out by my hon. Friend the Member for Rhondda, West (Mr. Alec Jones), who fought so hard for the disabled in Committee, we moved amendments put forward by the Disablement Income Group which, though not perfect, would have made a start. It would have begun to latch in the disabled to an earnings related benefit. That is what we tried to do. We tried to do it on the State reserve scheme and, above all, on the occupational pension scheme.
There has been talk about Europe. Recent examples were quoted in Committee. Switzerland, for instance, has introduced a mandatory occupational pension scheme, a condition of which is that it must create a disablement income for those who have to retire prematurely. We are talking about things which are happening every day of the week.
I am far less inclined to trust the gentle and smooth assurances given by the right hon. Gentleman when I recall an amendment that I moved in Committee. That, too, was so moderate that I was almost ashamed of it. It did not even demand that disability cover should be a condition of recognition for occupational pension schemes. It merely gave the Government power to fix that as a condition at a later date. But even that was too precipitate for the Government.
I wish that the right hon. Gentleman and his hon. Friend on the Front Bench would not chortle about a matter on which hon. Members on both sides of the House feel so genuinely and passionately.
Disabled people listening to this debate are waiting for a message of hope from this House. We have had no indication from the right hon. Gentleman that he has even accepted this matter as a principle that must be worked out. I do not underestimate the problems.

There are difficulties in latching the disabled into a contributory scheme, but it can be done. The point is whether we want to try and whether, if it cannot be done in a contributory scheme, it can be done in some other scheme. For instance, the Opposition have worked out proposals for crediting into a national superannuation scheme that we would introduce pensioners who have not contributed. We would latch them in by credits because they have a need. We could do it for the disabled, too, in many ways.
We merely ask the right hon. Gentleman for a commitment to the principle and to a date on which he would report on how he would operate the principle Is it much to ask?
8.15 p.m.
I hope that, as a protest against the speech delivered by the right hon. Gentleman tonight, hon. Gentlemen opposite will stick by their amendment, imperfect as it is. I ask them not to be afraid. If the amendment is passed and NIAC is not the right vehicle, the right hon. Gentleman will find a better form of words in another place. Indeed, I will suggest a form of words that might satisfy him. We could have had a new clause—modest again, heaven knows!— which provided:
The Secretary of State shall lay before Parliament on or before 30th April 1974 a report on what amendments are needed in the law relating to social security to meet the special need of chronically sick and disabled persons.
That would give the right hon. Gentleman exactly what he has said he wants—the freedom to conduct his own survey through the medium that he thinks is the most appropriate and with the help of his experts. That bypasses NIAC.
I suggest that we should stand by the amendment which has had such massive and enthusiastic support from hon. Members on both sides of the House. Let us carry it. I believe that if we do we shall get the report in the way that we want it.

Mr. Meacher: The Secretary of State said that a series of quicker steps was better than a long-term study. The clear implication was that he knew in which direction those steps were being taken. He rejected a short-term survey to


achieve quicker action while retaining his middle-term strategy. The right hon. Gentleman may talk about a strategy for the disabled, but we certainly have not got one. From the beginning we have had a series of tactical skirmishes and short-run advances, but there is no strategy.
One of the main reasons for referring the whole question of disability income to the NIAC is to jerk the Government towards producing a definite strategy. They have hailed the Bill as a monument, but it represents an exceptionally fragmented situation for the disabled.
As my right hon. Friend the Member for Blackburn (Mrs. Castle) has so eloquently said, it is a gross anomaly that invalidity is not treated on a par with widowhood or retirement. There is to be an earnings-related supplement to sickness benefit paid for the first six months and an earnings-related supplement at retirement. But in the interval there is a big slump to the flat-rate level, which clearly has nothing to do with the question of need and certainly implies a great lack of strategy, apart from anything else.
The result is that one-third of the 400,000 invalidity pensioners who have received this benefit, of which the Government make so much, will still have to claim supplementary benefit, although this will be slightly reduced as a result of the larger than normal uprating of the invalidity allowance under the National Insurance and Supplementary Benefit Bill, but it will not be reduced by much.
The second reason why I support this modest amendment is that, although I do not believe it would have a great effect, it might somewhat speed the movement towards a national disability income in favour of which all hon. Members taking part in the debate have spoken strongly. This is so necessary at present because still far too many disabled persons in receipt of disablement benefit are forced on to the poverty line. The latest report says that 159,000 sick and disabled persons who are not getting national insurance benefit are forced to go on to supplementary benefit and 80,000 of them have been in receipt of supplementary benefit for five years.

That is an intolerable situation and one which would not have lasted so long if there had been some strategy in Government action.
There is a clear lack of imagination in existing policies concerning the disabled. The hon. Member for Kensington, South (Sir B. Rhys Williams) said that one of the results of the NIAC study would be a close look at policies in regard to the disabled in other countries, but it is not information that is lacking. The Secretary of State himself said that his Department has undertaken to look at the position in European countries which have produced a policy for the disabled in the EEC. Seven out of nine of those countries pay a partial benefit for partial inability to work, and that considerably assists rehabilitation. In this country we have no half-way house and we impose a wage stop which creates a strong disincentive for the disabled to return to work. The information is not unknown to the Secretary of State, but there is a lack of political will to act on the basis of the information.
It would be helpful to pass an amendment of this kind because there are wholesale anomalies of which the Government are perfectly well aware. Those disabled who are at work are favourably treated and get a disability pension on top of their national insurance benefit and an extended scale of attendance allowance. But there are others who have been disabled from childhood or in early life, and a married woman who is unemployed has to rely on her husband's insurance. All these are cinderellas in the disablement insurance world. The reason why I support the referral tonight is that, if a proper and full report were made and sufficient publicity were given it, I believe that the Government could no longer allow these problems and inequities to exist. We lack not information but political will and priorities.
The Government have given away £3,000 million in tax reliefs, one-sixth of which has gone to those with an income of £5,000 a year. We compare that with the £50 million a year for the 3 million disabled. That is a tiny fraction for a vast number of persons compared with the £400 million or £500 million given to the rich. The bipartisan goodwill approach towards the Government record on the disabled is thoroughly misplaced.

Sir K. Joseph: I must contradict the figures which the hon. Gentleman has used in case he takes my silence as meaning that I accept them. I think they are grossly inaccurate and should not be taken as in any way reflecting the facts.

Mr. Meacher: I am surprised at the right hon. Gentleman. The attendance allowance is certainly not giving the disabled more than £25 million to £50 million. The invalidity pension and allowance does not give as much as that. The total cannot be more than £50 million to £75 million a year. Before making that kind of retaliatory point, although I know it is embarrassing for him, the right hon. Gentleman should check his figures. They are as small as that, even though it is embarrassing to say so.
The right hon. Gentleman is unwise to reject the amendment, because I am sure he will appreciate that there is growing impatience among backbenchers on both sides of the House who recognise that the rate of progress, given the priorities of the Government towards doing more for the disabled, is extremely disappointing. Above all, there is a lack of commitment, albeit that the right hon. Gentleman is undertaking the studies in his Department, to completion of a definite objective. The reason why the right hon. Gentleman should accept the amendment is that until he does so he will be giving no evidence of commitment to an overall strategy for the disabled.

Sir B. Rhys Williams: I listened, as I always do, with the greatest interest, and indeed fascination, to the way in which the right hon. Lady the Member for Blackburn (Mrs. Castle) developed her argument, for there is always so much truth in what she says. Sometimes there is more truth than can be good for her argument. Tonight she recommended the way in which my amendment might have been framed. It was, of course, better because it was much wider but it probably might not have been selected. Mine was a means, however, of getting a debate on this subject.

Mrs. Castle: I was not in any way casting aspersions on the drafting ability of the hon. Member for Kensington, South (Sir B. Rhys Williams), but merely suggesting to the Secretary of State the way

in which he could meet our point. Any Government amendment is always selected.

Sir B. Rhys Williams: It would be fruitful if we could follow the line of the amendment which the right hon. Lady drafted. She pointed out, also, that it is difficult to find a way of drafting a scheme which, while still a contributory scheme, can produce a disability income. If I had to define the long-term objective, I would say that it is to get a disability income. I am not certain that we could get it most quickly by seeking to build on national insurance, although I am sure that it could be improved to help the disabled. I believe that we shall get a disablement income through the tax credits scheme.
In my memorandum to the Select Committee on Tax Credits I suggested that a disablement income should be part of the tax credits scheme, but the Disablement Income Group has not done this. That I regret. I do not think the group's silence is due to its doubt about the desirability of such a proposal. I hope that the Department will be impressed by the speeches which have been made on this and other occasions in favour of a disablement income. I am increasingly getting the feeling that that is the sense of the House and that that is what we want.
8.30 p.m.
Would that be the recommendation that would follow from the setting up of a sub-committee, or if NIAC itself were to get down to considering the subject? In any case, I am not sure that it would be in order to make that recommendation. I am therefore prepared to accept my right hon. Friend's suggestion that the object was to secure another debate on the subject. It has been a useful and interesting debate. I regret that the right hon. Lady is looking so disgruntled, because her contribution was extremely useful, as were those of others who took part.
Every debate on this subject forces the machine forward by one ratchet. I am not sorry that we have had this discussion, and I am grateful to all who have taken part in it. I accept that the National Insurance Advisory Committee is not the ideal vehicle to help formulate the Government's long-term strategy. I


shall seek the leave of the House to withdraw the amendment, but my right hon. Friend must take note that we shall return to the subject.
I beg to ask leave to withdraw the amendment.

Hon. Members: No.

Question put,That the amendment be made: —

The House divided: Ayes 137, Noes 157.

Division No. 130.]
AYES
[8.30 p.m.


Armstrong, Ernest
Ford, Bon
Orme, Stanley


Ashton, Joe
Fraser, John (Norwood)
Oswald, Thomas


Atkinson, Norman
Ginsburg, David (Dewsbury)
Owen, Or. David (Plymouth, Sutton)


Barnes, Michael
Grant, John D. (Islington, E.)
Padley, Walter


Barnett, Guy (Greenwich)
Hamilton, James (Bothwell)
Palmer, Arthur


Barnett, Joel (Heywood and Royton)
Hamilton, William (Fife, W.)
Pardoe, John


Beaney, Alan
Hamling, William
Parker, John (Dagenham)


Bennett, James (Glasgow, Bridgeton)
Hardy, Peter
Pendry, Tom


Bidwell, Sydney
Harper, Joseph
Radice, Giles


Bishop, E. S.
Harrison, Walter (Wakefield)
Reed, D. (Sedgefield)


Booth, Albert
Hart, Rt. Hn. Judith
Roberts,Rt.Hn.Goronwy(Caernarvon)


Boyden, James (Bishop Auckland)
Houghton, Rt. Hn. Douglas
Ross, Rt. Hn. William (Kilmarnock)


Biadley, Tom
Hughes, Mark (Durham)
Rowlands, Ted


Brown, Hugh D. (G'gow, Provan)
Jenkins, Hugh (Putney)
Sandelson, Neville


Carmichael, Neil
John, Brynmor
Sheldon, Robert (Ashton-under-Lyne)


Carter, Ray (Birmingh'm, Northfield)
Johnson, Waller (Derby, S.)
Shore, Rt. Hn. Peter (Stepney)


Castle, Rt. Hn. Barbara
Jones, Dan (Burnley)
Silkin, Rt. Hn. John (Deptford)


Clark, David (Colne Valley)
jones.Rt.Hn.Sir Elwyn(W.Ham,S.)
Silkin, Hn. S. C. (Dulwich)


Coleman, Donald
Kaufman, Gerald
Skinner, Dennis


Concannon, J. D.
Kelley, Richard
Spriggs, Leslie


Cox, Thomas (Wandsworth, C.)
Lamborn Harry
Stallard, A. W.


Crawshaw, Richard
Lamond, James
Steel, David


Cronin, John
Latham, Arthur
Stewart, Rt. Hn. Michael (Fulham)


Crosland, Rt. Hn. Anthony
Lawson, George
Strang, Gavin


Cunningham, G. (Islington, S.W.)
Lee, Rt. Hn. Frederick
Summerskill, Hn. Dr. Shirley


Cunningham, Dr. J. A. (Whitehaven)
Lomas, Kenneth
Swain, Thomas


Daiyell, Tam
McElhone, Frank
Thomas, Jeffrey (Abertillery)


Davidson, Arthur
McGuire, Michael
Thorpe, Rt. Hn. Jeremy


Davies, Denzil (Llanelly)
Mackenzie, Gregor
Tope, Graham


Davies, G. Elfed (Rhondda, E.)
Mackintosh, John P.
Varley, Eric G.


Davies, Ifor (Gower)
Maclennan, Robert
Wainwright, Edwin


Davis, Terry (Bromsgrove)
McMillan, Tom (Glasgow, C.)
Walker, Harold (Doncaster)


de Freitas, Rt. Hn. Sir Geoffrey
McNamara, J. Kevin
Wallace, George


Delargy, Hugh
Marks, Kenneth
Watkins, David


Dell, Rt. Hn. Edmund
Marquand, David
Weitzman, David


Doig, Peter
Meacher, Michael
Wells, William (Walsall, N.)


Dormand, J. D.
Mellish, Rt. Hn. Robert
Whitehead, Phillip


Douglas, Dick (Stirlingshire, E.)
Mendelson, John
whitlock, William


Douglas-Mann, Bruce
Mikardo, Ian
Willey, Rt. Hn. Frederick


Duffy, A. E. P.
Millan, Bruce
Williams, Alan (Swansea, W.)


Dunn, James A.
Mitchell, R. C. (S'hampton, Itchen)
Williams, W. T. (Warrington)


Edwards, Robert (Bilston)
Morgan, Elystan (Cardiganshire)
Wilson, Rt. Hn. Harold (Huyton)


Ewing, Harry
Morris, Charles R. (Openshaw)
Woof, Robert


Fernyhough, Rt. Hn. E.
Moyle, Roland



Fletcher, Ted (Darlington)
O'Malley, Brain
TELLERS FOR THE AYES:


Foot, Michael
Orbach, Maurice
Mr. Caerwyn E.Roderick.




NOES


Adley, Robert
Chapman, Sydney
Fletcher-Cooke, Charles


Allason, James (Hemel Hempstead)
Chichester-Clark, R.
Fookes, Miss Janet


Amery, Rt. Hn. Julian
Clark, William (Surrey, E.)
Fortescue, Tim


Archer, Jeffrey (Louth)
Clarke, Kenneth (Rushcliffe)
Fowler, Norman


Atkins, Humphrey
Cockeram, Eric
Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)


Baker, Kenneth (St. Marylebone)
Cooke, Robert
Gardner, Edward


Baker, W. H. K. (Banff)
Coombs, Derek
Gibson-Watt, David


Bell, Ronald
Cooper, A. E.
Gilmour, Sir John (File, E.)


Benyon, W.
Corfield, Rt. Hn. Sir Frederick
Glyn, Dr. Alan


Bitten, John
Cormack, Patrick
Godber, Rt. Hn. J. B.


Biggs-Davison, John
Critchley, Julian
Goodhew, Victor


Boardman, Tom (Leicester, S.W.)
Dean, Paul
Gower, Raymond


Body, Richard
Dixon, Piers
Grant, Anthony (Harrow, C.)


Boscawen, Hn. Robert
Edwards, Nicholas (Pembroke)
Gray, Hamish


Bowden, Andrew
Elliott, R. W. (N'c'tle-upon-Tyne,N.)
Green, Alan


Brocklebank-Fowler, Christopher
Eyre, Reginald
Grieve, Percy


Brown, Sir Edward (Bath)
Farr, John
Grylls, Michael


Bruce-Gardyne, J.
Fell, Anthony
Gummer, J. Selwyn


Bryan, Sir Paul
Fenner, Mrs. Peggy
Gurden, Harold


Butler, Adam (Bosworth)
Fidler, Michael
Hall, John (Wycombe)




Harrison, Col. Sir Harwood (Eye)
Mather, Carol
Speed, Keith


Haselhurst, Alan
Maude, Angus
Spence, John


Hastings, Stephen
Maxwell-Hyslop. R. J.
Stewart-Smith, Geoffrey (Belper)


Hawkins, Paul
Meyer, Sir Anthony
Stuttaford, Dr. Tom


Hayhoe, Barney
Miscampbell, Norman
Sutcliffe, John


Hiley, Joseph
Mitchell, David (Basingstoke)
Taylor,Edward M.(G'gow,Cathcart)


Holland, Philip
Molyneaux, James
Taylor, Frank (Moss Side)


Hordern, Peter
Monks, Mrs. Connie
Taylor, Robert (Croydon, N.W.)


Hornsby-Smith, Rt. Hn. Dame Patricia
Morgan, Geraint (Denbigh)
Tebbit, Norman


Howell, David (Guildford)
Morrison, Charles
Temple, John M.


Howell, Ralph (Norfolk, N.)
Murton, Oscar
Thomas, John Stradling (Monmouth)


Hunt, John
Neave, Airey
Trew, Peter


Hutchison, Michael Clark
Nott, John
Tugendhat, Christopher


James David
Osborn, John
Turton, Rt. Hn. Sir Robin


Jenkin, Patrick (Woodford)
Owen, Idris (Stockport, N.)
Van Straubenzee, W. R.


Jessel, Toby
Page, Rt. Hn. Graham (Crosby)
Vaughan, Dr. Gerard


Johnson Smith, G. (E. Grinstead)
Page, John (Harrow, W.)
Vickers, Dame Joan


Joseph, Rt. Hn. Sir Keith
Percival, Ian
Waddington, David


Kellett-Bowman, Mrs. Elaine
Price, David (Eastleigh)
Walder, David (Clitheroe)


Kimball, Marcus
Pym, Rt. Hn. Francis
Ward, Dame Irene


Knox, David
Redmond, Robert
Warren, Kenneth


Lamont, Norman
Reed, Laurance (Bolton, E.)
Weatherill, Bernard


Lane, David
Rees, Peter (Dover)
Wells, John (Maidstone)


Langford-Holt, Sir John
Ridley, Hn. Nicholas
White, Roger (Gravesend)


Le Marchant, Spencer
Ridsdale, Julian
Wiggin, Jerry


Lewis, Kenneth (Rutland)
Roberts, Wyn (Conway)
Winterton, Nicholas


Lloyd, Ian (P'tsm'th, Langstone)
Rossi, Hugh (Hornsey)
Wolrige-Gordon, Patrick


Loveridge, John
Scott, Nicholas
Woodhouse, Hn. Christopher


Luce, R. N.
Shaw, Michael (Sc'b'gh &amp; Whitby)
Worsley, Marcus


MacArthur, Ian
Shelton, William (Clapham)



McCrindle, R. A.
Shersby, Michael
TELLERS FOR THE NOES:


McLaren, Martin
Sinclair, Sir George
Mr. Michael Jopling and


Maclean, Sir Fitzroy
Skeet, T. H. H.
Mr. Marcus Fox.


McNair-Wilson, Michael
Soref, Harold

Question accordingly negatived.

Clause 49

RECOGNISED PENSIONABLE EMPLOYMENT

Amendment proposed: No. 53, in page 64, line 37, at end insert:
'and
(f) it offers to women earners the same rights to membership as it offers to men'.— [Mr. O'Malley.]

Question put, That the amendment be made:—

The House divided: Ayes 136, Noes 159.

Division No. 131.]
AYES
[8.39 p.m.


Armstrong, Ernest
Davies, Denzil (Llanelly)
Hughes, Mark (Durham)


Ashton, Joe
Davies, G. Elfed (Rhondda, E.)
Jenkins, Hugh (Putney)


Atkinson, Norman
Davies, Ifor (Gower)
John, Brynmor


Barnes, Michael
Davies, Denzil (Llanelly)
Johnson, Walter (Derby, S.)


Barnett, Guy (Greenwich)
de Freitas, Rt. Hn. Sir Geoffrey
Jones, Dan (Burntey)


Barnett, Joel (Heywood and Royton)
Delargy, Hugh
Jones, Rt. Hn. Sir Elwyn (W.Ham,S.)


Beaney, Alan
Dell, Rt. Hn. Edmund
Jones, T. Alec (Rhondda, W.)


Bennett, James(Glasgow, Bridgeton)
Doig, Peter
Kaufman, Gerald


Bidwell, Sydney
Dormand, J. D.
Kelley, Richard


Bishop, E. S.
Douglas, Dick (Stirlingshire. E.)
Lamborn, Harry


Bcoth, Albert
Douglas-Mann, Bruce
Lamond, James


Boyden, James (Bishop Auckland)
Duffy, A. E. P.
Latham, Arthur


Bradley, Tom
Dunn, James A.
Lawson, George


Brown, Hugh D. (G'gow, Provan)
Edwards, Robert (Bilston)
Lee, Rt. Hn. Frederick


Carmichael, Neil
Ewing, Harry
Lomas, Kenneth


Carter, Ray (Birmingh'm, Northfield)
Fernyhough, Rt. Hn. E.
McElhone, Frank


Castle, Rt. Hn. Barbara
Fitch, Alan (Wigan)
McGuire, Michael


Clark, David (Colne Valley)
Fletcher, Ted (Darlington)
Mackenzie, Gregor


Coleman, Donald
Foot, Michael
Mackintosh, John P.


Concannon, J. D.
Ford, Ben
Maclennan, Robert


Cox, Thomas (Wandsworth, C.)
Fraser, John (Norwood)
McMillan, Tom (Glasgow, C.)


Crawshaw, Richard
Ginsburg, David (Dewsbury)
McNamara, J. Kevin


Cronin, John
Grant, John D. (Islington, E.)
Marks, Kenneth


Crosland, Rt. Hn. Anthony
Hamilton, William (Fife. W.)
Marquand, David


Cunningham, G. (Islington, S.W.)
Hamling, William
Meacher, Michael


Cunningham, Dr. J. A. (Whitehaven)
Hardy, Peter
Mellish, Rt. Hn. Robert


Dalyell, Tam
Harrison, Walter (Wakefield)
Mendelson, John


Davidson, Arthur
Hart, Rt. Hn. Judith
Mikardo, Ian




Millan, Bruce
Roderick, Caerwyn E.(Brc'n&amp;R'dnor)
Variey, Eric G.


Mitchell, R. C. (S'hampton, Itchen)
Ross, Rt. Hn. William (Kilmarnock)
Wainwright, Edwin


Morgan, Elystan (Cardiganshire)
Rowlands, Ted
Walker, Harold (Doncaster)


Morris, Charies R. (Openshaw)
Sandelson, Neville
Wallace, George


Moyle, Roland
Sheldon, Robert (Ashton-under-Lyne)
Watkins, David


O'Mallay, Brian
Shore, Rt. Hn. Peter (Stepney)
Weitzman, David


Oram, Bert
Silkin, Rt. Hn. John (Deptford)
Wells, William (Walsall, N.)


Orbach, Maurice
Silkin, Hn. S. C. (Dulwich)
Whitehead, Phillip


Orme, Stanley
Skinner, Dennis
Whitlock, William


Oswald, Thomas
Spriggs, Leslie
Willey, Rt. Kn. Frederick


Owen, Dr. David (Plymouth, Sutton)
stallard, A. W.
Williams, Alan (Swansea, W.)


Padley, Walter
Steel, David
Williams, W. T. (Warrington)


Palmer, Arthur
Stewart, Rt. Hn. Michael (Fulham)
Wilson, Rt. Hn. Harold (Huyton)


Pardoe, John
Strang, Gavin
Woof, Robert


Parker, John (Dagenham)
Summerskill, Hn. Dr. Shirley



Pendry, Tom
Swain, Thomas
TELLERS FOR THE AYES:


Radice, Giles
Thomas, Jeffrey (Abertillery)
Mr. Joseph Harper and


Reed, D. (Sedgefield)
Thorpe, Rt. Hn. Jeremy
Mr. James Hamilton.


Roberts,Rt.Hn.Goronwy(Caernarvon)
Tope, Graham





NOES


Adley, Robert
Grieve, Percy
Osborn, John


Allason, James (Hemel Hempstead)
Grylis, Michael
Owen, Idris (Stockport, N.)


Amery, Rt. Hn. Julian
Gummer, J. Selwyn
Page, Rt. Hn. Graham (Crosby)


Archer, Jeffrey (Louth)
Gurden, Harold
Page, John (Harrow, W.)


Atkins, Humphrey
Hall, John (Wycombe)
Percival, lan


Baker, Kenneth (St. Marylebone)
Hannam, John (Exeter)
Price, David (Eastleigh)


Baker, W. H. K. (Banff)
Harrison, Col. Sir Harwood (Eye)
Pym, Rt. Hn. Francis


Bell, Ronald
Haselhurst, Alan
Redmond, Robert


Benyon, W.
Hastings, Stephen
Reed, Laurance (Bolton, E.)


Biffen, John
Hawkins, Paul
Rees, Peter (Dover)


Biggs-Davison, John
Hayhoe, Barney
Rhys Williams, Sir Brandon


Boardman, Tom (Leicester, S.W.)
Hiley, Joseph
Ridley, Hn. Nicholas


Body, Richard
Holland, Philip
Ridsdale, Julian


Boscawen, Hn. Robert
Hordern, Peter
Roberts, Wyn (Conway)


Bowden, Andrew
Hornsby-Smith, Rt.Hn.Dame Patricia
Rossi, Hugh (Hornsey)


Brocklebank-Fowler, Christopher
Howell, David (Guildford)
Scott, Nicholas


Brown, Sir Edward (Bath)
Howell, Raiph (Norfolk, N.)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Bruce-Gardyne, J.
Hunt, John
Shelton, William (Clapham)


Bryan, Sir Paul
Hutchison, Michael Clark
Shersby, Michael


Butler, Adam (Bosworth)
James, David
Sinclair, Sir George


Chapman, Sydney
Jenkin, Patrick (Woodford)
Soref, Harold


Chichester-Clark, R.
Jessel, Toby
Speed, Keith


Clark, William (Surrey, E.)
Johnson Smith, G. (E. Grinstead)
Spence, John


Clarke, Kenneth (Rushcliffe)
Joseph, Rt. Hn. Sir Keith
Stewart-smith, Geoffrey (Belper)


Cockeram, Eric
Kellett-Bowman, Mrs. Elaine
Stuttaford, Dr. Tom


Cooke, Robert
Kimball, Marcus
Sutcliffe, John


Coombs, Derek




Cooper, A. E.
Kinsey, J. R.
Taylor, Edward M. (G'gow, Cathcart)


Corfield, Rt. Hn. Sir Frederick
Knox, David
Taylor, Frank (Moss Side)


Cormack, Patrick
Lamont, Norman
Taylor, Robert (Croydon, N. W.)


Critchley, Julian
Lane, David
Tebbit, Norman


Dean, Paul
Langford-Holt, Sir John
Temple, John M.


Dixon, Piers
Le Marchant, Spencer
Thomas, John Stradling (Monmoulh)


Edwards, Nicholas (Pembroke)
Lewis, Kenneth (Rutland)
Trew, Peter


Elliot, R. W. (N'c'tle-upon-Type, N.)
Lloyd, lan (P'tsm'th, Langstone)
Tugendhat, Christopher



Loveridge, John
Turton, Rt. Hn. Sir Robin


Eyre, Reginald
Luce, R. N.
Van straubenzee, W. R.


Farr, John
MacArthur, lan
Vaughan, Dr. Gerard


Fell, Anthony
McCrindle, R. A.
Vickers, Dame Joan


Fenner, Mrs. Peggy
McLaren, Martin
Waddington, David


Fidler, Michael
Maclean, Sir Fizroy
Walder, David (Clitheroe)


Fletcher-Cooke, Charles
McNair-Wilson, Michael
Ward, Dame Irene


Fookes, Miss Janet
Mather, Carol
Warren, Kenneth


Fortescue, Tim
Maude, Angus
Weatherill, Bernard


Fowler, Norman
Maxwell-Hyslop, R. J.
Wells, John (Maid3tone)


Fraser,Rt.Hn.Hugh(St'fford&amp;Stone)
Meyer, Sir Anthony
White, Roger (Gravesend)


Gardner, Edward
Miscampbell, Norman
Wiggin, Jerry


Gibson-Watt, David
Mitchell, David (Basingstoke)
Winterton, Nicholas


Gllmour, Sir John (Fife, E.)
Molyneaux, James
Wolrige-Gordon, Patrick


Glyn, Dr. Alan
Monks, Mrs. Connie
Woodhouse, Hn. Christopher


Godber, Rt. Hn. J. B.
Morgan, Geraint (Denbigh)
Worsley, Marcus


Goodhew, Victor
Morrison, Charles



Gower, Raymond
Murton, Oscar
TELLERS FOR THE NOES:


Grant, Anthony (Harrow, C.)
Neave, Airey
Mr. Marcus Fox and


Gray, Hamish
Nott, John
Mr. Michael Jopling.


Green, Alan

Question accordingly negatived.

8.45 p.m.

Mr. Dean: I beg to move Amendment No. 54, in page 65, line 21, at end insert:
'(8) Where by any provision in this Part of this Act recognition of a scheme in relation to an employment depends on the satisfaction of a particular condition, continued recognition of the scheme shall be dependent on continued satisfaction of the condition; and if the condition ceases to be satisfied, that shall be a ground (without prejudice to any other) for cancellation of the recognition certificate.
(9) Regulations may, for any purpose of this Part of this Act, prescribe the persons who are to be regarded as members or prospective members of an occupational pension scheme and as to the times at which, and the circumstances in which, a person is to be treated as becoming, or as ceasing to be. a member or prospective member'.

Mr. Deputy Speaker (Miss Harvie Anderson): With it, I understand, it will be convenient to discuss Amendments Nos. 76 and 77.

Mr. Dean: This is technical drafting amendment.

Amendment agreed to.

Clause 51

MINIMUM PERSONAL BENEFIT ON TERMINATION OF EMPLOYMENT

Mr. Dean: I beg to move Amendment No. 55, in page 67, line 21, after 'scheme' insert:
'either—
(i)'.

Mr. Deputy Speaker: With it we shall discuss Amendment No. 56.

Mr. Dean: These are technical amendments designed to ensure that any short service benefit or permitted alternatives to which an earner in recognised employment becomes entitled under the general preservation requirements must include his minimum benefits.

Amendment agreed to.

Amendment made: No. 56, in page 67, line 24, at end insert:
'or
(ii) makes any provision which under those requirements is permitted as an alternative to short service benefit (other than, in such cases as may be prescribed, provision for return of contributions or benefit in the form of a lump sum):'.—[Mr. Dean.]

Mr. Dean: I beg to move Amendment No. 57, in page 67, line 44, leave out from 'payment' to end of line 45 and insert:
'when he attains that age or (with his consent in writing) at some later time:'.
It is designed to introduce an element of flexibility into the recognition conditions by permitting schemes to postpone payment of a deferred minimum pension where the owner consents. It is intended primarily to cover the case where an earner continues working after a pensionable age and prefers, possibly for tax reasons, to defer receiving any of his pension entitlement until he finally retires.

Amendment agreed to.

Mr. David Crouch: I beg to move Amendment No. 58, in page 68, line 6, at end insert—
'(6) The scheme must not include provisions having for their effect the reduction of the minimum pension payable to a person by any amount in respect of any retirement benefit to which that person is entitled under Part I of this Act'.
This is an extremely important amendment, so important that I came back from a Parliamentary Committee in Paris especially to move it. I must read to the House again the words in the amendment which go to its heart. They are:
The scheme must not include provisions having for the their effect the reduction of the minimum pension payable to a person".
That is the heart of what I would ask the House to accept. It is quite wrong that there should be a provision, even a loophole, that allows any reduction of a minimum pension which accrues and is earned from contributions by a would-be pensioner.
This is the loophole which I seek to remove. It is possible today for an occupational pension scheme to be reduced by an amount equal to the national insurance pension earned from contributions by a pensioner and payable to him. It is the practice for such deductions to be made.
I think it would help the House if I read an extract from a typical set of standard rules of a pension scheme from a well-known company. I shall not mention its name. What I am about to illustrate is common practice throughout


occupational pension schemes. It reads as follows:
On retirement the Employee shall receive a pension of a yearly amount equal to one-sixtieth part of the Retiring Salary for every complete year of Service subject to a maximum annual pension of two-thirds of the Retiring Salary. Provided always that if the Employee shall have entered the Service on or after the 5th day of July 1948 the amount of the pension calculated as aforesaid shall be reduced by one-half of the amount of retirement pension from time to time obtainable by him if he were a single person without dependents under the National Insurance Act 1948 or any statutory amendment or re-enactment thereof or by such proportion as the Diretcors (with the consent of the Trustees) may think fit if any pension to which he may become entitled under any similar legislation of Northern Ireland or of Eire".
To me, that is a revealing statement of a situation which exists today and has always existed. There has been a loophole in the insurance Acts all this time which has been taken advantage of by those who operate otherwise generous pension schemes. The scheme offered in my quotation is two-thirds less half of the amount of the State pension. When I heard this from a constituent, I thought it was quite staggering. A Conservative Member of Parliament always tends to hope that there will be two pension schemes. There is the State pension on the one hand, but that is merely a safety net to provide for the barest essentials in life, and on top of that pensioners are given the opportunity to provide for themselves. We hope that in occupational schemes employers will also make this contribution so that the extra provision is especially generous. I was amazed when I found that the second pension scheme was to have deducted from it the amount of the national insurance old-age pension.
I believe that it would be helpful to the House if I read from a letter I received from my hon. Friend the Under-Secretary just under a year ago, when I first raised the point with him. He wrote to me on 31st May last year saying:
I should first explain that no occupational pension scheme is empowered to reduce national insurance pensions of its members. The pensioner has an inalienable right to his national insurance pension except where provided for in the National Insurance Act (for example, where the pensioner is in prison). It is, however, a common practice for schemes to be constructed to make allowance for the National Insurance Scheme. In consequence,

they have rules which provide for adjustment of their benefits to take account of national insurance contribution. Thus it is the occupational pension which is reduced, not the national insurance pension.
That is splitting hairs. The fact is that a person's pension entitlement has been reduced, and the Department says that it is a common practice, something that it expects to happen. My hon. Friend continued:
The net effect is the same either way but the distinction is an important one.
I think that the distinction is a question of splitting hairs.

Mr. George Cunningham: Is the hon. Gentleman aware that table 26 on page 31 of the latest Government Actuary's report on occupational pension schemes shows that no fewer than 17 per cent. of the members of occupational pension schemes suffer the disadvantage to which he is drawing attention? That is one in six of all the members of occupational pension schemes.

Mr. Crouch: I am grateful to the hon. Gentleman for that useful statistical contribution to support my argument.
I wanted to make two points in support of my amendment. I have already made the point that the politicians' claim for two pensions is being invalidated by the Bill. Secondly, when this loophole was allowed to appear in the National Insurance Act, 1946, it was very tiny, affecting a pension of £1 6s., or £1·30. A deduction of £1·30 a week does not amount to much more than £60 or £70 a year. Today, however, my constituent who raised the matter with me is having deducted, according to the rules of his scheme, half a pension worth £7·75, which means a deduction from his other pension entitlement under the occupational scheme of over £200. It could be the full amount of £7·75. That is what worries me.
Others more expert in pension problems than I will argue that that is normal, common practice. The problem is not so much that of an inadequate occupational pension—some schemes are very good—but rather that there is a reduction in what is expected by the employee, particularly an employee who might not have read the small print or who after many years has forgotten what was in the


rules. In the case I have quoted the reduction is only 50 per cent., but it could be more.
To me, it sounds wrong and I think that it is wrong. It creates dissatisfaction. When we are trying to mend industrial relations, labour relations and staff relations and to improve harmony in industry, it creates bad staff relations, bad industrial relations and bad labour relations. It is one of those little points that should be put right.
We are talking about the provision of two pensions for everyone in employment. I do not believe that one of the pensions should be robbed to pay for the other. It is a case of Peter being robbed to pay Paul, and I cannot accept that. I am not suggesting—there is no suggestion— that the value or part of the value of the State pension may be deducted from pensions payable under the State reserve scheme under Part III of the Bill. I accept that nowhere is there such a loophole.
9.0 p.m.
I should like an assurance from my hon. Friend the Under-Secretary that there is no such loophole for any deductions from pensions payable under the State reserve scheme. I hope that that is not intended. If that is so, I cannot accept that a different standard should apply to the private sector for which, for the first time, we are drawing up rules and regulations and a code. The House is accustomed to codes, but this is a code which it is important to get right. That is why I have sought to delay the House on a matter which I consider to be important.

Mr. Nicholas Edwards: My hon. Friend the Member for Canterbury (Mr. Crouch) has made a valuable suggestion about the way in which firms could enhance their presentation and improve labour relations. I am not sure that the point is much more than that.
I intervene only because of the phrase which my hon. Friend used about robbing Peter to pay Paul. I think he will find that the contributions for the pension scheme were calculated on the basis that the level of pensions produced would be not two-thirds, but two-thirds less the deduction. In deciding the level of bene-

fits, including life cover and other subsidiary benefits, an employer would assess the various alternative options which he could give his employees out of a total pension contribution. He would compare the arrangements with what is now provided in the Bill.
The Bill lays down minimum standards. The example that was cited to us of a pension of two-thirds of final salary less a reduction for State pension would be very much higher than any of the minimum standards established in the Bill. I accept that there is room for misunderstanding.
I am a director of a company which has altered its pension scheme. It had such a provision but the company decided to do away with it. If people think that they will retire on two-thirds of final salary, that is what they should get. It is true that people do not necessarily read the pension scheme rules. I do not think my hon. Friend should make too much of this matter. He should not imply that in some way there has been a swindle and that the members of a scheme have been getting less than they paid for. That is misleading and should be corrected.

Mr. Dean: I am grateful to my hon. Friend the Member for Canterbury (Mr. Crouch) for raising this point. He has done a service to the House by coming back from his commitments in Paris in order to raise it. What I shall say to him about the arrangements under the new scheme will, I hope, satisfy him completely. I am glad that my hon. Friend the Member for Pembroke (Mr. Nicholas Edwards), with his expert knowledge of pension arrangements, has already anticipated the position after the reconstruction that has been made in the scheme to which he referred.
The recognition conditions under the Bill will always be additional to any benefits provided through the basic scheme. That is already the effect of the Bill. The methods of calculating the minimum benefits and the earnings on which they are based are such that any integration with or reduction by the basic scheme benefits is impossible at the minimum level. That applies not only to an occupational pension scheme which qualifies for recognition but applies to the reserve pension scheme.
Occupational pension schemes, over and above the minimum level which I have mentioned, will remain free to integrate with the basic scheme any benefits they choose to provide over and above that minimum. This is because we are concerned in the Bill only to lay down the minimum standards, and we must accept that any provision over and above them is a matter for the employer concerned in consultation with his employees.
Nevertheless, integration above the minimum standards may well begin to seem less attractive as employees recognise the importance of occupational pension schemes and realise that they can only secure the maximum benefits in retirement if there is not integration in the basic scheme.
I hope I have satisfied my hon. Friend that the point on which he expresses very understandable concern will be offside under the new arrangements. I hope and believe, that, as the concept of two pensions becomes generally accepted in the community, we shall find in practice that this will apply not only, as it must do under the Bill, to the minimum benefits in recognised occupational schemes and benefits in the reserve pension scheme, but also on a voluntary basis to benefits over and above that. I hope my hon. Friend feels that he has fulfilled a valuable function by coming back from Paris to raise this important issue and that I have clarified it to his satisfaction.

Mr. Crouch: Can my hon. Friend clarify the term "offside"? By that term, is he seeking to close the loophole which I say exists? Could he elaborate on the term, which was definite in that respect?

Mr. Dean: Yes. I assure my hon. Friend that the loophole he mentioned, or whatever one likes to call it, will not be possible under the new arrangement because a recognised occupational pension scheme will be obliged to provide at least the minimum benefits which are required for recognition purposes, and these must be provided over and above whatever benefits the individuals concerned are entitled to under the basic scheme.

Mr. Crouch: I have listened with great care to what my hon. Friend has said,

and I am glad he came back on my intervention to strengthen what he said about what I call the "loophole". I am not altogether happy, however, because I have been long enough in this House to recognise that it is valuable in our legislation to dot the i's and cross the t's. One does not work in our Committees for a long time without recognising that that is an essential part of our function. Good debating is only one side of it; good drafting is another. I am sorry that my hon. Friend has not gone as far as I would have liked, but he has accepted what I think is the spirit of my amendment and I shall watch very closely to ensure that it is enacted in that way.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Dean: I beg to move amendment No. 59, in page 68, leave out lines 19 to 21.

Mr. Deputy Speaker (Mr. E. L. Mallalieu): With this we are to take Amendment No. 66, in page 71, leave out lines 35 to 37.

Mr. Dean: The effect of these amendments is to remove the regulation-making powers to prescribe when the minimum personal or widows' pensions should cease to be payable on the death of the beneficiary.
The intention was to permit schemes which pay pensions in arrears to terminate the benefit as from the pay day prior to death. Such a provision would have assisted schemes administratively, but there was some concern, when this was discussed in Standing Committee, that it could lead to financial loss for the beneficiary's dependants at a time when they were most in need. We have therefore, reconsidered this in the light of the views expressed in Committee, and have concluded that the possible loss of benefit outweighs the administrative advantages of such a provision.

Mr. O'Malley: We are grateful to the Government for listening to our representations on this subject, taking them into account and coming to the conclusion that at least on this one minor occasion the interests of the individual recipient should come before the administrative convenience of the scheme. While


I welcome the amendment, I feel that it is a pity that on broader issues the Government have been unable to give the interests of individuals priority over administrative convenience.

Amendment agreed to.

Clause 52

RATE OF MINIMUM PERSONAL PENSION

Amendment made: No. 60, in line 23, leave out 'earner's average' and insert 'annual rate of earner's'.——[Mr. Dean.]

Mr. Dean: I beg to move Amendment No. 61, in page 70, line 20, at end insert:
'(8) Without prejudice to subsection (7) above, the scheme must provide, in the case of minimum personal pension not coming into payment at its full rate until after pensionable age (where the earner remains in the relevant employment after attaining that age, or consents in writing to postponement), for the pension to be adjusted so as to take into account any period between pensionable age and the time when the pension comes into payment at its full rate; and—

(a) this provision must be made in such a way as to satisfy the Occupational Pensions Board as to its adequacy; and
(b) recognition of the scheme may be made subject to prescribed conditions as to the adjustment of benefit in such cases'.


The effect of the amendment is to require schemes to adjust the minimum personal pension in a manner satisfactory to the Occupational Pensions Board where its payment is deferred until after pension age. The adjustment required must not only maintain the value of the pension during the period of deferment but actually enhance it to take account of the period during which it is not in payment. This will enable women who are prepared to retire later than age 60 to receive a higher pension than that laid down in the Bill.
The methods of adjustment or supplementation are not laid down in the amendment because these will vary; for example, according to whether contributions continue to be paid during the period of deferment. It is therefore preferable to leave the board to decide whether each method used by schemes is adequate.
The regulation-making power in paragraph (b) is essentially a precautionary

measure to allow scope for further conditions while the precise implications of this requirement are discussed with those concerned.
The amendment fulfils an undertaking given by the Government in Committee, and it was referred to yesterday in one of our main debates on women's pension rights.

Mr. Dell: I am grateful to the Government for making this amendment. I take it that it means that in respect of women who retire after the age of 60 and men who retire after the age of 65 the annual rate of pension will be in respect of a woman higher than 0·70 per cent. or 0·90 per cent. and, in the case of a man, higher than 1·00 per cent. or 1·25 per cent.

Mr. Dean: The effect of the amendment, as was explained by my right hon. Friend yesterday, is that if a woman postpones her retirement until the age of 65—the normal retirement age for men— her accrual rate will be broadly the same as that of a man.

Mrs. Elaine Kellett-Bowman: I thank the Minister for moving the amendment. He knows what great assistance it will be to the women in my constituency, many of whose cases he has been kind enough to take up. I pass on their gratitude to him.

Amendment agreed to.

Clause 53

MINIMUM DEATH BENEFIT (CASES AND FORM IN WHICH IT IS TO BE PAYABLE)

9.15 p.m.

Mr. Dell: I beg to move Amendment No. 62, in page 70, line 29, leave out from 'scheme' to end of line 30.

Mr. Deputy Speaker: With this amendment it will be convenient if we discuss Government Amendment No. 64 and Amendment No. 177, in page 70, line 43, leave out from beginning to end of line 3 on page 71.

Mr. Dell: We are now to deal in rapid succession with two issues on which the Government were defeated in Committee. In this case, the first occasion on which they were defeated, they appear to have accepted the defeat and they have brought


forward the necessary amendment to implement the wish of the Committee.
The House will have realised that there was an anomaly in the original Bill which meant that in an occupational pension scheme, unlike the reserve pension scheme, a widow might not get the 50 per cent. of pension that the Bill was supposed to provide.
The circumstances in which that could occur would be when a man married after he had acquired an interest in preserved pensions. It was pointed out in Committee that this could frequently happen in respect of people who married in their late twenties or early thirties, by which time they might have acquired preserved occupational pensions. However, their widows would have no right in those preserved pensions unless the Bill was amended. The Government are now making the necessary change by Amendment No. 64.
I welcome the amendment. I simply ask the Government one question about it because it contains one element which I do not welcome—that is, its second word "may". Will the Government explain why they are not requiring regulations to be made to deal with this point and why they simply say that they may be made? This leaves open the possibility that the anomaly will continue. In our view, it would be better if the Government dealt with the situation outright and said that regulations definitely would be made to deal with the anomaly from which widows would otherwise suffer.

Mr. Airey Neave: I do not intend to pursue the point made by the right hon. Member for Birkenhead (Mr. Dell) on Amendment No. 62. I want warmly to welcome Amendment No. 64, which deals with a very important principle about which some of us have been concerned for some time. The aspect to which I refer is that of the post-retirement widows, as they are known, in the public service. Under the amendment they would be covered by Clauses 53 and 54.
In January 1971, as some of my hon. Friends will remember, I raised this matter on the Adjournment so far as it affected the Armed Forces. Since members of the Armed Forces are now employed persons under the Bill their

widows will benefit from Amendment No. 64.
The principle under which the current regulations apply to various branches of the public service goes back to 1818. It was designed apparently to prevent fortune hunters marrying old men, especially generals. The principle applied throughout the public service schemes, as hon. Members will know.
Members on both sides of the House have pressed the Government for a long time to abolish this archaic regulation, principally because the practice in other countries differs and widows are not deprived of any pension if their husbands marry or remarry after their retirement. For that reason I was pleased to read for the first time in November 1971 paragraph 20 of my right hon. Friend's White Paper which recommended the need for widowhood cover in occupational pension schemes for men who marry or remarry after retirement. I know that there have been difficulties, and my right hon. Friend is to be congratulated on having overcome some of those which we faced in reconciling the different problems.
It will be regretted that many widows will not benefit from the amendment. The scheme is not retrospective, and I believe that it will not come into operation for some two years. I have no doubt that my hon. Friend the Under-Secretary will tell us when.
There were big problems with regard to the different services which have different retiring ages. Some retire considerably earlier than others. But I wish to ask my hon. Friend a specific question about the last sentence of Amendment No. 64, which says that the regulations
may restrict their application to cases where the marriage takes place not less than a prescribed period before the earner's death.
What has he in mind here? During the Adjournment debate on the Armed Forces I suggested that it should be for only a period of two years. What period has he in mind? I would be glad if he would deal with this matter and tell us the estimated cost of pensioning an estimated few thousand widows. It is a small sum.
It has taken a long time to achieve this, but I am glad the Government have done


it. By their wisdom they have brought about this change in occupational pension practice despite the problems involved. They are to be congratulated.

Mr. Deputy Speaker: Order. I should have said, some time ago, that Amendments Nos. 64 and 177 were being discussed at the same time.

Mr. Boscawen: I warmly congratulate my hon. Friend on bringing in this important social measure. This has been an injustice to a small number of people which should never have been allowed to occur. My hon. Friend is to be congratulated on putting this right, bearing in mind that it has gone on for more than a century He has overcome enormous difficulties, including opposition in the various services and the Armed Forces
I would like to hear the answer to the question about cost I hope that my right hon. Friend can persuade his right hon. Friends in the Defence Department to bring this into effect for the Services sooner than in 1975.

Dame Irene Ward: I should like to add my thanks and congratulations. We have fought for a long time for the points made in Amendment No. 64. My hon. Friend the Member for Abingdon (Mr. Neave) has put it all very clearly. He was the leader of the campaign in the Services. I was delighted to be there to support him every time he took action because I have always taken a great interest in the Services. I am glad we now have a Government which are devoted to the Services.
After what my hon. Friend said I am lucky to be alive to see that our campaign has finally resulted in legislation. It will be a great joy to many people. The more people we can make happy, as the Government try to do, the better the country will be. The quicker we can bring this in, the better.

Mr. Dean: This has been a happy little debate. I am very glad to reply in that spirit. My hon. Friends the Members for Tynemouth (Dame Irene Ward), for Abingdon (Mr. Neave) and for Wells (Mr. Boscawen) have long campaigned for this proposal, particularly with regard to the Armed Services. I am sure the whole House would wish to pay tribute to their

work over the years which has resulted in the amendment.
The right hon. Member for Birkenhead (Mr. Dell) explained the effect of Amendment No. 62. There is no need for me to say much more about it except to point out that the effect of this group of amendments is to delete the words which are no longer meaningful now that the Bill requires a minimum death benefit whenever a man dies leaving a widow.
The right hon. Gentleman asked what was the significance of the word "may" in the phrase "Regulations may provide" in Amendment No. 64. The answer is that the Bill now leaves no choice but to cover post-leaving marriages. There may be modifications covering marriages of short duration. There may have to be modifications to the death benefit. Amendment No. 64 is complementary to Amendment No. 62. The Government accept that schemes should be required to cover marriages contracted after leaving the relevant employment and the regulation-making power in subsection (2A) is a necessary precaution while the implications of those requirements are discussed with all concerned. We know that some schemes could have difficulty in covering these marriages, particularly those occurring after pensionable age. It may be necessary to permit those schemes that wish to do so to protect themselves against the abuse of deathbed marriages, perhaps by excluding marriages which have lasted for only a short time.
My hon. Friend the Member for Abingdon asked what period we had in mind. I cannot give him a precise answer because we wish to discuss this fully with the pension interests and the schemes concerned. We have a comparatively short time in mind to prevent obvious abuse which I do not think anyone would wish to see. My hon. Friend also asked whether this would apply to the Armed Forces. This provision will apply to all recognised schemes. At the moment I cannot say what occupational schemes, be they public or private sector, will apply for recognition. It will apply to all recognised schemes from the date when the new recognition conditions come into operation, namely April 1975. It is not possible to give an accurate estimate of the cost. It is likely to be fairly small.
I am grateful for what has been said on both sides of the House about this


improvement for a comparatively small but very deserving group of widows. I commend the amendment to the House.

Mr. O'Malley: Before the hon. Gentleman sits down, will he answer one question? He spoke of a comparatively small number of widows who would benefit from this. As I understand it, when a man retires from recognised pensionable employment and marries following that retirement, the widow will be entitled to widowhood and death benefit. Is it not also true that when a young person leaves employment after having been there for over five years and subsequently marries, there would be a widowhood entitlement?

Mr. Dean: I can assure the hon. Gentleman that that is the case. This applies not only to marriages which take place after retirement but to those which take place after a person leaves the scheme. There are likely to be more in the latter category than in the former.

9.30 p.m.

Mr. Dell: I thank the Under-Secretary for accepting in its entirety one of my amendments. I said in Committee that I had no such ambition. This evening the hon. Gentleman has done it.
One of the incidental benefits of my series of amendments on this matter has been the elimination of the statutory definition of "widow" which appeared in the original legislation:
a woman to whom he was married at whatever time is under that subsection the relevant time of marriage for the particular case.
Whatever else this series of amendments has done for widows, it has done a great deal for the English language.

Amendment agreed to.

Mr. Dean: I beg to move Amendment No. 63, in page 70, line 37, leave out from 'for' to 'allowed' in line 38 and insert 'recognition credits'.
This is a consequential amendment following the acceptance of an amendment to Clause 56 in Committee.

Amendment agreed to.

Amendments made: No. 64, in page 70, line 43, leave out from beginning to end of line 3 on page 71 and insert:
'(2A) Regulations may provide for the requirements of this section and section 54 of

this Act to apply with prescribed modifications in relation to an earner whose marriage takes place after the termination of his service in recognised pensionable employment by reference to the scheme, and may restrict their application to cases where the marriage takes place not less than a prescribed period before the earner's death'.

No. 66, in page 71, leave out lines 35 to 37.—[Mr. Dean.]

Clause 56

TRANSFER OF BENEFIT BETWEEN SCHEMES: LINKED QUALIFYING SERVICE

Mr. Dean: I beg to move Amendment No. 67, in page 74, line 16, leave out 'Part of this'.
This is a technical amendment.

Amendment agreed to.

Clause 58

PROVISIONS BARRING COMMUTATION, SURRENDER OF FORFEITURE OF MINIMUM BENEFIT

Mr. Dean: I beg to move Amendment No. 68, in page 77, line 27, leave out 'transfer' and insert 'recognition'.
This is consequential on an amendment to Clause 56 which was accepted in Committee.

Amendment agreed to.

Clause 59

MINIMUM BENEFIT TO BE INALIENABLE

Amendments made: No. 69, in page 78, line 5, leave out 'or in Scotland assignation'.

No. 70, in page 78, line 10, leave out from 'bankruptcy' to 'of in line 11.

No. 71, in page 78, line 13, leave out 'or assignation'.

No. 72, in page 78, line 17, at end insert:
'(4) In the application of this section to Scotland:

(a) the reference to assignment of benefit shall be read as a reference to its assignation, "assign" being construed accordingly; and
(b) the reference to a person's bankruptcy shall be read as a reference to the sequestration of his estate or the appointment on his estate of a judicial factor under section


14 of the Bankruptcy (Scotland) Act 1913 or section 15 of the Solicitors (Scotland) Act 1958'.—[Mr. Dean.]

Clause 60

SUPERVISION OF SCHEMES AFTER WITHDRAWAL OF RECOGNITION

Mr. Dean: I beg to move Amendment No. 73, in page 78, line 41, leave out '(a)'.

Mr. Deputy Speaker: With this amendment it will be convenient to consider Government Amendment No. 75.

Mr. Dean: These are technical amendments designed primarily to clarify the legal effect of this provision.

Amendment agreed to.

Amendments made: No. 74, in page 79, line 1, leave out from 'purpose' to 'as' in line 2.

No. 75, in page 79, leave out lines 4 to 8 and insert:
'in the case of an employer failing to make any payment required by such an order—

(a) the Board may make a further order declaring the amount which the employer has failed to pay to be a debt due from him to the Board and may recover it from him accordingly; and
(b) any amount so recovered shall be paid over by the Board (on the employer's behalf) in accordance with the terms of the original order '.—[Mr. Dean.]

Clause 61

REQUIREMENTS RELATING TO PRESERVATION OF BENEFITS

Amendments made: No. 76, in page 81, line 28, after 'member', insert 'or prospective member'.

No. 77, in page 81, leave out lines 34 to 40.—[Mr. Dean.]

Clause 62

MODIFICATION AND WINDING-UP BY ORDER OF OCCUPATIONAL PENSIONS BOARD

Amendment made: No. 78, in page 84, line 1, leave out from 'the' to end of line 4 and insert:
'transfer of accrued rights to another scheme with a view to the acquisition, for those whose rights are transferred, of rights under the other'.—[Mr. Dean.]

Clause 64

ESTABLSHMENT OF THE BOARD; THEIR FUNCTIONS AND PROCEDURE

Mr. Dean: I beg to move Amendment No. 79, in page 87, line 38, at end insert:
'(5A) It shall be the duty of the Board, as soon as practicable after the end of each calendar year, to make to the Secretary of State a report on the exercise of their functions in that year; and the Secretary of State shall lay a copy of the report before each House of Parliament'.
This arose from a discussion in Committee on an amendment put down by the right hon. Member for Birkenhead (Mr. Dell), which would have required the Occupational Pensions Board to present an annual report to Parliament. This proposal I accepted on behalf of the Government, and I am now implementing the undertaking to introduce the appropriate amendment on Report. I am grateful to the right hon. Gentleman for his suggestion.

Mr. Dell: I thank the Under-Secretary for this amendment. He will notice that I have suggested an amendment to the amendment to eliminate the sloppy words "as soon as practicable after" and to insert the decisive words "within four months from". No one can ever tell what is "as soon as practicable". It is very much better to have a time limit. A time limit is increasingly required in all sorts of legislation where reports have to be made. As the Secretary of State told us yesterday, this report will be a mine of information. We want the mine to be mined while the information is still relevant and up-to-date. I should like an assurance from the Under-Secretary on what he thinks "as soon as practicable" means. I would prefer him to accept my amendment to the amendment.

Mr. Dean: I understand the point the right hon. Gentleman has made. It is clearly desirable that the reports should be made as quickly as possible. I hope that he will accept that the board must be given sufficient time to process the statistics and to compile a sound and comprehensive report. It could be in danger of being unable to do so if it had to meet an arbitrary date line four months after the end of the period to which the reports relate. A statutory obligation of this kind seems unnecessary


and could well put the board in a position in which it was not able to provide a report which was as comprehensive as necessary. I think the right hon. Gentleman will accept that he has got the principle which he laid down accepted but it would be undesirable to tie the board down in this way.

Amendment agreed to.

Clause 69

THE RESERVE PENSION BOARD

Mr. Dean: I beg to move Amendment No. 80 in, page 91, line 12, leave out subsection (3) and insert:
'(3) The Board shall make such arrangements with the Secretary of State and the Northern Ireland Ministry as appear expedient for associating the administration of the reserve pension scheme with that of—

(a) the basic scheme as it operates in Great Britain and Northern Ireland respectively; and
(b) the Industrial Injuries Acts and the corresponding enactments in force in Northern Ireland,
and for the exchange of information in that behalf'.

Mr. Deputy Speaker: With this Amendment we can consider Government Amendments Nos. 81, 84, 86, 105, 106 and 138.

Mr. Dean: This is a formal amendment designed to bring the provisions into line with the general provisions of the Bill in regard to Northern Ireland. The other amendments in this group have a similar effect.

Amendment agreed to.

Clause 70

THE RESERVE PENSION FUND

Amendments made: No. 81, in page 91, line 39, leave out from 'Fund' to end of line 32 on page 92 and insert:
'(1 A) There shall be paid into the Reserve Pension Fund—

(a) by the Secretary of State and the Northern Ireland Ministry respectively all contributions and premiums paid to them under this Part of this Act, after deduction of the relevant administrative expenses; and

(b) by the Board, all money received by them, whether in the nature of income or capital (including any money which they borrow).

(1B) The reference in subsection (1A)(a) above to the relevant administrative expenses—

(a) as regards the Secretary of State, is to such sums as he may estimate to be the expenses falling on him or any other government department in Great Britain, in collecting reserve scheme contributions and premiums and paying them into the Reserve Pension Fund; and
(b) as regards the Northern Ireland Ministry, is to such sums as that Ministry may estimate to be the expenses so falling on it or any other department of the government of Northern Ireland;
and any estimate for the purposes of paragraph (a) or (b) above shall be arrived at in accordance with any directions of the Treasury or, in Northern Ireland, the Ministry of Finance.

(1C) There shall be paid out of the Reserve Pension Fund—

(a) the reserve scheme pensions provided for by sections 76 and 77 of this Act;
(b) any expenditure of the Reserve Pension Board in the exercise of their functions (including expenditure on administration and the repayment of money borrowed by the Board); and
(c) any sums which are payable by the Board to the Secretary of State or the Northern Ireland Ministry in respect of administrative services provided in pursuance of arrangements made under section 69(3) of this Act.

(2) There shall be paid out of the Reserve Pension Fund—

(a) into the Consolidated Fund, sums representing expenses falling on any government department in Great Britain and attributable to this Part of this Act, being expenses in respect of the functions—

(i) under section 71(6) of this Act of the Government Actuary, and
(ii) under section 81 of this Act (as it applies to Great Britain) of the Secretary of State, insurance officers, local tribunals and National Insurance Commissioners;

(b) into the Exchequer of Northern Ireland, sums representing expenses falling on any department of the government of Northern Ireland and so attributable, being expenses in respect of functions under section 81 of this Act (as it applies to Northern Ireland) of the Northern Ireland Ministry, insurance officers, local tribunals and National Insurance Commissioners;
and payments under this subsection shall be made at such times and in such manner, and the amount of any expenses referred to in paragraph (a) or paragraph (b) shall be estimated in such manner, as the Treasury or, in Northern Ireland, the Ministry of Finance may direct.

(2A) The Secretary of State and the Northern Ireland Ministry respectively shall in respect of each financial year prepare accounts showing—

(a) the sums received by them in that year and paid into the Reserve Pension Fund as contributions and premiums under this Part of this Act;
(b) any sums paid by them in that year on behalf of the Reserve Pension Board as reserve scheme pensions (in pursuance of arrangements made for the purposes of section 69(3) of this Act);
(c) the relevant administrative expenses for the purposes of subsection (lA)(a) above; and
(d) any receipts by them under subsection (1C)(c);
and these accounts shall be prepared in such form, and in such manner and at such times, as the Treasury or, in Northern Ireland, the Ministry of Finance, may direct; and the Comptroller and Auditor General shall examine Secretary of State's accounts and lay copies thereof, together with his report thereon, before Parliament; and the Comptroller and Auditor General for Northern Ireland shall examine the accounts of the Northern Ireland Ministry and lay copies thereof, together with his report thereon, before the Parliament of Northern Ireland'.

No. 82, in page 92, line 47, at end insert:
'(3A) Where payments fall to be made by way of adjustment—

(a) out of the Reserve Pension Fund, to a department of the Government of Northern Ireland or into the Northern Ireland National Insurance Fund or the Exchequer of Northern Ireland; or
(b) into the Reserve Pension Fund, out of the Northern Ireland National Insurance Fund or out of other public money belonging to Northern Ireland,
then in such cases or classes of case as may be specified by the Northern Ireland Ministry by order made with the consent of the Ministry of Finance the amount of the payments to be made shall be taken to be such, and payments on account thereof shall be made at such times and in such manner, as may be determined by that Ministry in accordance with any directions given by the Ministry of Finance'.

No. 83, in page 93, line 14, at beginning insert:
' Subject to subsection (2A) above'.—[Mr. Dean.]

Clause 73

RESERVE SCHEME CONTRIBUTIONS

Amendment made: No. 84, in page 96, line 4, leave out 'in accordance with this section' and insert:
'or, in Northern Ireland, to the Northern Ireland Ministry'.—[Mr. Dean.]

Sir B. Rhys Williams: I beg to move Amendment No. 180, in page 97, line 13, leave out subsection (7) and insert:
'(7) There shall be paid each year into the Reserve Pension Fund out of the National Insurance Fund a sum equal to the amount of tax paid that year by contributors to the reserve scheme which would not have been so paid if payments made as primary contributions under this section attracted the same relief from income tax as payments to a superannuation fund to which section 20S of the Income and Corporation Taxes Act 1970 applies; and such payments into the fund shall be applied to the provision of bonuses under section 78 of this Act.'

Mr. Deputy Speaker: With this we are to take the following:
Amendment No. 85, in page 97, line 13, leave out subsection (7), and new Clause 10:

Tax credits for members of reserve pension scheme

'The Secretary of State shall provide for the payment to be made annually to the Reserve Pension Fund out of the National Insurance Fund of a sum to be added to the account of each member of the reserve pension scheme equal to any difference between the tax relief in respect of his contributions to the reserve scheme to which that member would have been entitled if the full amount of the contributions had been a permissible deduction from income for purposes of calculation of tax at the standard rate and the amount of such relief which he actually obtained in the relevant year.'

Sir B. Rhys Williams: I note that with my amendment we are to take the Government's highly controversial Amendment No. 85, and new Clause 10, which has been selected not for a Division but only for discussion as it is germane to the whole question of the tax treatment of members of the proposed reserve occupational pension scheme.
It will probably not be necessary for the House to proceed to a Division on my amendment, unless there is some


unexpected turn in the debate. I say that because the amendment was tabled after I was informed by a member of the Opposition that the Government had decided to table Amendment No. 85, which will have the effect of reversing the decision taken in Committee. Because of the rules of order my amendment has to be taken first, but it is contingent on the outcome of our debates on Amendment No. 85. Nevertheless, it raises a point of real relevance, and I think that at this stage it may help if I say something about the significance of new Clause 10, which has been tabled to try to find a way out of the difficulty in which the House finds itself as a result of the Government's decision to reverse the Committee's vote.
The purpose of the clause is to find a way of making certain that anyone in the reserve scheme, whether or not he is sufficiently well paid to be above the tax horizon, will be able on the analogy of the option mortgage scheme, to receive some recognition of the fact that tax concessions are provided in the private sector and have a considerable value.
It might be advantageous if my right hon. Friend explained his motive in tabling Amendment No. 85, so that the House can judge the situation and learn the Government's intentions. Since I understand that I am in the privileged position of being able to speak again in the debate, I propose, if my right hon. Friend agrees, to ask him to give us the benefit of his views.

9.45 p.m.

Mr. R. A. McCrindle: I stand condemned or commended, depending on one's approach, as one of the two Conservative Members who, because of our votes against the Government in Committee, have been thought to oblige the Government to bring forward Amendment No. 85. I have no expressions of regret for having taken the action I did. If it has done nothing else, it has brought sharply into focus an extremely important, almost a fundamental, aspect of the Bill.
I cannot but be gratified that, from a situation in which two Members voted against and a few of our colleagues abstained, a tiny whimper of protest has grown into a veritable roar in the

columns of the Press in the last few days. To that extent also I have no apologies to make. When such diverse organs as The Times, the Sun and the Economist indicate that they are perhaps on our side in this argument, it is gratifying indeed.
But my main purpose tonight is to restate the reasons why I took the line I did in Committee and why I am comparatively unrepentant. The reasons why I and my hon. Friends took the line we did are rather different from those which animated the Opposition in that vote. Nothing will be gained by concealing the fact that we approach this subject from different standpoints.
I believe sincerely that if this provision to give no tax relief under the reserve scheme were to be reinstalled in the Bill it would be an act of discrimination against the people in the reserve scheme. If it were as simple as saying "Only a few people have to be in the State reserve scheme," that would be one thing. But, as the House now realises, many millions of people will, because of the nature of their occupations, have no alternative but to go into the reserve scheme.
The Government have said that they have taken this line because a large number of those who go into the State scheme will not be taxpayers. But that argument does not stand up to close examination. The Government's expectation of membership of the scheme is about 7 million people, and even they have conceded that, of that number, only 2 million do not pay tax. That is very different from saying that the majority are non-taxpayers and that, therefore, the question of tax allowances is not important. That is the first reason why I have taken the line that I have taken against the Government.
The second reason is equally important, if not, from my standpoint, more important. That is that I have a fundamental belief in the superiority of private enterprise in the provision of pensions. I am convinced that with equal tax treatment the occupational pension schemes are able to compete to the point of absorbing and attracting the low earners, whom it is assumed that the occupational pensions movement has chosen to overlook. I say that to my right hon. Friend the Secretary of State in particular.
I speak with some knowledge and experience of the life assurance industry. One has to confess that the life offices do very nicely out of pensions business. For them it is an attractive and profitable line. But there has been an understandable tendency for them to pass over the small saver because administratively he does not always fit well into an occupational pension scheme.
If we can extend this area of competition across the whole board of occupational pension schemes, the life offices will be compelled to provide that competitive situation which will prevent what my right hon. Friends fear; that is, the situation that the State reserve scheme will grow at the expense of the occupational pension schemes. That will happen only if the occupational pension schemes allow it to happen. Starting from a basis of equal competition, that need not happen.
The impression may have been gained, however, from what has been said by my right hon. Friends that they feel that they must take this line because of the need for the life offices to be protected from competition from the State reserve scheme. If anyone has taken that line, he would be interested to hear of a communication that I have received today from the Life Offices Association. Just before my right hon. Friend the Secretary of State intervenes, which he appears to be trying to do, perhaps he would allow me to read the letter.

Sir K. Joseph: I should be grateful if my hon. Friend would allow me to assert, as I think I can, that no right hon. Friend of his or mine would have made such a comment as he imputes to us. If my hon. Friend was suggesting that either myself or any of my right hon. Friends said that our proposal was in order to protect life offices, I hope he will withdraw that, because I do not think it is true.

Mr. McCrindle: If I said anything unfair, I withdraw it. However, I should still like to read the letter. It says:
It appears from press comment, for example in the Economist last week, that the life offices might be accused during the course of debate on Report, of being one of the bodies responsible for persuading the Government to put down Amendment No. 85 to the social security bill to omit subsection (7) of Clause 73.
We know you might like to know that our view is that the question of whether or

not these contributions should qualify for tax relief is a matter solely for political decision and we have communicated this view to the Department of Health and Social Security. If it so happens that the life offices are criticised for bringing pressure to bear on the Government, we would welcome your help in making clear that this is not true.
I hope that the position of the life offices has now been made clear by that letter.
I want to see a situation of fair competition between the occupational pension schemes and the Government reserve scheme. If we start from that basis of fair competition it is likely and, indeed, probable that the benefits which will accrue to members of occupational pension schemes will be so attractive that that in itself will be the best antidote to the expansion of the State reserve scheme.
The Government reply to these points by making several reasonable points themselves. I want to emphasise that I do not impute any ill motives to the Government. I am suggesting that they are misguided. They start by saying that it is not unfair because lower contributions will be required from the employee under the State reserve scheme. That logic must be carried through.
If the only thing standing between acceptance of our view and the position that the Government take is that there should be equalisation of contribution if there is equalisation of tax treatment, many of us would go along with that. However, when we make that point the Government come on to their second point that it would lead to considerable administrative difficulties and delay in the implementation of the Bill, which has the broad support of all my right hon. and hon. Friends. I do not accept that a Government which have been prepared to accept the challenge of a vastly changing tax system, on which we have by common consent been moving faster in the last three years than ever before, can plead administrative difficulty in opposing my proposition.
It is said that there is a risk that the State reserve scheme will absorb millions more people than ideally the Government had set their sights upon. That may be so. But it is only so if the occupational world allows it to be so. In this situation of straight competition there is a great deal that can and will be done to provide


so much better benefits under occupational pensions. As this whole thing gets under way, trade union bargaining will be directed towards urging employers to go into occupational pension schemes. That is the positive way to advance the strategy which underlines all that the Government have been saying over the last few years.
The Government's fourth point, and it is a valid one, is that if this is carried to its conclusion additional Government expenditure of about £25 million will be involved. That will be so only if the occupational pensions industry shows that it is incapable of attracting into schemes all the people with whom we are now concerned, those we assume will go into the State reserve scheme. These are vital factors in the consideration of this extremely important and fundamental issue.
I conclude by simply addressing myself to my right hon. and hon. Friends. I have taken this line quite consistently because I have felt that good competition was what we should be looking for. But I am making this speech tonight as a member of the Conservative Party. I remind my right hon. and hon. Friends that private enterprise is the animus of the Conservative Party and that competition is the hand-maiden of private enterprise. I suggest to those who are undecided about how they should move in this vital matter that if the time ever comes when the Conservative Party is not prepared to stand up and defend the interests of private enterprise, that will be an unhappy day.
For all these reasons the Government have a powerful case to answer, and I look forward with great interest to listening to what my right hon. Friend has to say.

Several Hon. Members rose—

Mr. Deputy Speaker: Mr. Stewart-Smith.

Mr. George Cunningham: On a point of order, Mr. Deputy Speaker. When the hon. Member for Kensington, South (Sir B. Rhys Williams) sat down, he suggested—I think that the Secretary of State responded to the suggestion—that the Secretary of State should intervene at this stage. I do not know whether I speak

for all Members, but certainly I would consider it useful to hear the Secretary of State's views.

Mr. Deputy-Speaker: That is not a matter for a point of order. Mr. Stewart-Smith.

Mr. Geoffrey Stewart-Smith: As the wish has been expressed that my right hon. Friend the Secretary of State should speak, I shall be brief. I speak with a certain amount of controlled anger about this matter. The Committee which looked into it for many agreeable weeks clearly and overwhelmingly came to the conclusion that Clause 72(7) should remain in the Bill. There is no getting away from that fact. I am not——

It being Ten o'clock, the debate stood adjourned.

Ordered,

That the Social Security Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Kenneth Clarke.]

Question again proposed, That the amendment be made.

Mr. Stewart-Smith: I am not a wizard, professional pensions man. In this debate I take the view much more of the lower-paid consumer.
We want the subsection that we put into the Bill in Standing Committee. We gave the Government time to think about the matter, but they have made absolutely no concession. They are trying to browbeat us into supporting them on it, and we will not have it.
What is intolerably injust in our opinion is that there is discrimination against the State reserve pension, especially as some workers are, in effect, compelled to enter that scheme precisely because of the nature of their work. They have no free choice. Why is there double taxation not only on the contributions but on the pension? It is intolerable that that should happen in the State scheme but not in the private scheme.
My right hon. Friend the Member for Finchley (Mrs. Thatcher) pointed out in 1965 that long ago, even apparently as far back as the time of Pitt, the principle was laid down that when benefits were taxable contributions should be deductible. That established principle is likely


to be violated by the Government tonight. Graduated pension contributions are not deductible, but no tax is paid on receipt of the pension.
In this matter the Opposition and the rebels have the support of the industry. The amount of money concerned is £25 million or even less. Undoubtedly, there would be administrative inconvenience to employers under the Bill, but we are

the Government. We govern. The buck stops here tonight, at the next Division.
We must decide where our loyalty lies. Does it depend on administrative convenience? Does it lie with the employers? Or does it He with the recipient, the consumer, the employee?
I ask the House tonight unashamedly and defiantly to keep the Bill as it stands as a result of the deliberations of the Standing Committee.

Sir K. Joseph: I respond gladly to the invitation of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), to whose zeal and knowledge I yet again pay tribute, to lay before the House the Government's arguments on what is a difficult issue.
I acknowledge that there is unease among my hon. Friends and that, on the face of things, it is not surprising that there should be some anxiety about what the Government have apparently suggested. I hope that hon. Members will allow me a little time, because I hope to lay before the House the reason why the removal of subsection (7) is proper and right, in the interests of the people whom we seek to serve, and central to the Government's strategy in connection with better retirement conditions for wage earners.
The Government believe that the more wage earners there are in recognised occupational pensions schemes, the better for them and the better for the country, but we also recognise that because of the nature of their employments or other personal or employment circumstances, by no means all people will be able to be in recognised occupational pension schemes. We accept the logic of our own strategy, and, although we are a Conservative Government dedicated to the solution of problems wherever practicable by the private enterprise means which my hon. Friend the Member for Billericay (Mr. McCrindle) rightly proclaimed, we accept the need for a State reserve scheme. I do not think that any of my hon. Friends will disagree with that logic which flows from our strategy.
Further, we all agree that it is no fault of the individual wage earner if he happens to land up in the reserve scheme. The decision is taken by the employers, and employers, as I shall come to describe, will take their decision in the light of their own circumstances, which will include, of course, the probable reaction of their employees.
To achieve our strategy it is the Government's purpose, while being fair to those in the reserve scheme, to encourage in the interests of wage earners the maximum practical membership of

recognised occupational pension schemes. I do not think that any of my right hon. and hon. Friends will disagree with that purpose.

Mr. Dell: One point immediately arises. The right hon. Gentleman said that it is his strategy to encourage people to go into recognised occupational pension schemes. However, he has emphasised many times that it is likely that many people will move before the period at which their occupational pension entitlement will be preserved and will go temporarily or for a long time into the reserve pension scheme. The right hon. Gentleman recognises that that will happen. What is his intention if his amendment succeeds? Is it his intention that the tax rebate which such people have received on their occupational pension contributions will be lost when they are paid back into the reserve pension scheme?

Sir K. Joseph: That is too technical a question for me to give an immediate answer. I think that the answer is "No." Perhaps I did not understand fully the right hon. Gentleman's question. Is it possible for him to repeat it?

Mr. Dell: Yes, I am very ready to repeat it. The right hon. Gentleman and his hon. Friend the Under-Secretary of State have told us many times that people will be moving from the occupational pension system into the reserve pension system in a period of less than five years and that as a consequence their pensions will not be preserved. When they are in the occupational pension scheme they get a tax rebate on their contributions. They will be paid into the reserve pension system. There are two alternatives. Either they will relinquish the tax rebate they have had on their earlier occupational pension contributions or they will not. If the right hon. Gentleman says that they will not, that is unfair because that means that many people will be in the reserve pension scheme and will have the tax rebate. If they will, it is even more unfair because all sorts of people will be having to pay back taxation. What is the situation? I should have thought that the right hon. Gentleman before moving the amendment, would have found out.

Sir K. Joseph: The right hon. Gentleman put his question in the terms "Will they lose their tax rebate?" I answered "No, they will not." I stand by that opinion. Let us follow the processes. This is a highly technical issue in an occupational pension scheme. Let us suppose that the individual employee is charged 2 per cent. gross. It costs him, if he is a taxpayer, roughly 1·4 per cent. If in due course, but before five years' service, he leaves that employment his employer has the obligation to buy him into the reserve scheme for the equivalent length of service. He has the obligation to pay into the reserve scheme 4 per cent. for the employees aggregate salary during the less than five years' service which he completed with the firm.
To enable the employer to do that, he can recover 1½ per cent. net from the employee in the reserve scheme. The employee will have benefited by more or less tax relief which he will get according to the amount of the contribution which he has paid. He may be entitled to a repayment from the firm although he has made good into the reserve scheme the contributions that would have been paid had he been there.

Mr. O'Malley: In that case, is not the right hon. Gentleman's position already in shreds? Is not the clear implication of what he has said that many members of the reserve pension scheme—this money purchase scheme—will have got tax relief as a result of this kind of procedure on the basis of payments made by the ex-employer when a man changes his job? Not only do we have disparity of treatment between members of occupational schemes and members of the reserve scheme, but disparity of treatment between one member of the reserve scheme and another. The right hon. Gentleman is in great trouble. Does he not think that the Government should change their minds even at this late stage?

Sir K. Joseph: I am afraid that my withers are completely unwrung. Perhaps on reflection I shall find something more in the argument of hon. Members opposite. There is an apparent triumph among the trio of hon. Members opposite who have studied this subject, but I still do not feel in the least embarrassed by what they have evidently drawn out of it.

Mr. George Cunningham: Does not the right hon. Gentleman understand that the reason why he is unable to deal with this point is that he is using a taxation device as an instrument in pension policy? He is not able to deal, from his own knowledge, with the point put by my right hon. Friend the Member for Birkenhead (Mr. Dell). It shows how wrong it is to use taxation policy as a means of shifting people from one kind of scheme to another.

Sir K. Joseph: This is broadening out into a general argument, which is preoccupying hon. Members, from an important but technical point on which I feel not the least embarrassment. The House wants a general explanation from the Government.

Mr. Dell: The point must be made clear. I think that the right hon. Gentleman must now accept that there will be inequities between members of the reserve pension scheme. Some will have had a tax rebate, whatever the fate of the amendment may be, and some will not. The right hon. Gentleman cannot say that that is not an inequitable position.

Sir K. Joseph: I am sorry, but I do not accept that it is in the least inequitable that, as between reserve scheme members, each member, whatever his previous treatment before he came into the reserve scheme, will have 4 per cent. paid into the reserve scheme divided by his employer, whether the current employer or retrospectively by the previous employer in whose employment he has not stayed for five years.
I return to the general argument. It is the Government's purpose, while being fair to those in the reserve scheme, to encourage, in the interests of the wage earners themselves, the maximum membership of recognised occupational schemes. The question whether tax relief should be provided on employees' reserve scheme contributions cannot be decided in isolation. The arrangements proposed by the Government have been devised so as to achieve a balance between encouraging the development of recognised occupational scheme developments and making acceptable provision for employees who are not members of recognised occupational schemes.
As one component, the Government have proposed an uneven split of reserve scheme contributions, whereby the employer pays 2½ per cent. and the employee pays only 1½ per cent., with no tax relief being allowed on the employee's contributions.
It is true that a split in favour of the employees is common in occupational schemes. Some are even non-contributory. I was guilty of a mis-statement in the House, for which I apologise to the hon. Member for Islington, South-West (Mr. George Cunningham). In an interjection in answer to a question I said that the split, which is 5 units on the employer to 3 units on the employee, in the reserve scheme, was better than in private occupational schemes. The fact is that I was wrong, and I apologise. The Government's proposal is roughly 37 per cent. on the employee. The average in occupational schemes is 33 per cent. on the employee. I was wrong, but not grossly wrong.
10.15 p.m.
I should like to correct one point in the speech of my hon. Friend the Member for Belper (Mr. Stewart-Smith). He said that it was outrageous that any contribution should not be tax deductible because, so he said, it is a general rule that what is put aside for pensions is not taxed because what is received in pensions is taxed. He is right about occupational pension contributions. The basic scheme pension contribution is not tax deductible. My hon. Friend put the proposition in general terms, and I am entitled to point that out to him.
I do not want to overstate what I am about to say, but, while it is absolutely true that occupational schemes on the whole on average divide the contributions more heavily on the employer than on the employee, there are two propositions to make about it. First, I think it is correct to say that some of the less generous occupational schemes divide the contributions more nearly 50/50 than 60/40.
Secondly, an occupational scheme as we know it at the moment is a voluntary occupational scheme initiated by an employer as part of the pay of his employees, for his own purposes, at his own discretion, and not under compulsion of law.

In these circumstances we must certainly take into account the split of contributions, but we should not regard them as mandatory when we come to consider a different animal; namely, a compulsory occupational pension scheme, which is what the reserve scheme is.
When we compel employers to act not necessarily at their own discretion, not necessarily as they would have liked to act, it is not right—nor did it seem to the Government right—to impose on them in addition a disproportionally heavy—more than half—share in the contribution.
The Government started from the proposition that if there had been tax relief on the employee's contribution the proper distribution of those contributions would have been 50 per cent. employer and 50 per cent. employee, which in a 4 per cent. total contribution scheme would have been 2 per cent. either side.
I know that the House will accept my word, whether hon. Members agree or disagree with the judgment made, when I say that that is the position. That is the chain of reasoning by which the Government arrived at their decision to split the contribution in the reserve scheme unevenly; that is, five units on the employer and three units on the employee.

Mr. George Cunningham: But what difference does it make to the employer whether or not the employee gets tax relief? The employer will have to pay his 2½ per cent., on which he gets tax relief, so that it comes down to 1½ per cent., and when the new corporation tax comes in it will come down to 1·25 per cent. He will pay that anyway, so whether or not the employee gets tax relief makes no difference to the employer. Does the Minister agree that no difference will be made in the cost to the employer if tax relief is given to the employee and no other change is made?

Sir K. Joseph: I should like the hon. Gentleman to carry his thinking one stage further back. I am not suggesting that, whatever the outcome of the decision this evening, we should alter the contribution split. Had the Government decided to provide tax relief on the employee's contribution they would have provided for the split to be even. The employer would then have paid a gross contribution of 2 per cent. and, applying the hon. Gentleman's tax deduction, the net cost to the


employer would have been less than it will be now when he is paying gross 2½ per cent.

Mr. Walter Johnson: The Secretary of State has had to make a number of apologies for mistakes that he has made already in the course of the debate. On this issue, is he not aware that it is a condition of service in many organisations for people to belong to a contributory pension scheme? I am sure that he will wish to correct what he said about that as well.

Sir K. Joseph: I do not deny that some people are obliged to belong to a contributory pension scheme. As for my mistake, for which I apologised, that occurred in the course of an interjection on Second Reading some months ago. The apology was overdue. It might have been made a little earlier. But it is only one apology for one mistake.
The House will want to know the effect of this shift in contribution from the employee to the employer as a result of the Government's proposals. Assuming total contributions for the reserve scheme, on an estimate of 7 million members at any one time, of £300 million a year, the decision to divide the contributions unevenly will mean in effect each year a shift from what the employees would have paid of £40 million off the employees' shoulders on to the employers' shoulders. Let me put the same point another way. Leaving aside the contribution which the employers will be paying anyway, the result of what the Government propose is that for each pound of an employee's contribution he will secure about £1·30 of benefit not by way of tax deduction as in an occupational scheme but by way of extra provided deliberately from the employer.
I pass fairly quickly over the fact to which my hon. Friend the Member for Billericay rightly referred, that a minority of people in the reserve scheme will be on earnings which do not qualify for taxation. Perhaps a third of members of the reserve scheme will not benefit from tax relief if it is provided.

Mr. George Cunningham: How many?

Sir K. Joseph: The calculation is 2 million out of an assumed 7 million members.

Mr. Cunningham: So that we get this right, the Minister's figure to me was between 5 million and 6 million taxpayers. That leaves between 1 million and 2 million non-taxpayers.

Sir K. Joseph: We are dealing with approximations. No one can be sure. The nearest figures that I have been given are 7 million members at any one time with about 2 million who might not be taxpayers.
I ask hon. Members to remember that tax exemption of employees' contributions will not add a penny to their benefits. I hope that none of my hon. Friends has any illusions about this.
The Government's policy depends upon a number of ingredients. I hope that the House will accept that in a carefully worked out plan such as this it is not possible to alter one ingredient without repercussions on the others. We cannot make the reserve scheme less modest without all sorts of other repercussions.
The reserve scheme was designed deliberately for wage earners whose employers faced most difficulty in providing pensions —small employers, employers with constantly changing work forces, and those employing some people on low earnings. They are the people for whom the reserve scheme was deliberately designed. Therefore, there is a limit to the amount of the contributions which can be asked for from this sector of the work force.
Further, because it is only right to allow exemption from the reserve scheme to occupational pension schemes which provide on the whole better benefits, any improvement in the benefits in the reserve scheme must be matched by at least proportionate improvements in the benefits laid down in the recognition tests which an occupational scheme has to meet. Any increase in the recognition test benefits will cost employers more and will discourage some marginal employers from having occupational pension schemes. If at this stage we embark upon opening up once more the question of the recognition tests there will be no hope whatever of bringing in this pension scheme, with all its potential for millions of people, in April 1975. That would involve a great loss of impetus in the occupational pension movement.
There is an amendment on the Notice Paper tabled by my hon. Friend the Member for Kensington, South, which would replace tax exemption with a direct tax subsidy to the reserve scheme close to what might have been the cost of tax exemption. All the difficulties I have described would be compounded if instead of tax exemption we went for tax subsidy. There would be the same higher costs for occupational schemes because levels of benefits for recognition would have to be raised, there would be the same discouragement to marginal occupational schemes, and there would be delay.
At this stage, before bringing together all the factors that have been discussed——

Sir B. Rhys Williams: My right hon. Friend suggested that I should not intervene at a point when I was particularly anxious to rise and he appears to be leaving that question now. Unless I am mistaken, it will be possible for private occupational pension schemes to have the same structure of contributions as is proposed in the reserve scheme; namely, 2½ per cent. from the employer and 1½ per cent. from the employee. Should that pattern be decided upon, there will not be any suggestion that in the private schemes the employees should lose the benefit of the tax concession. How can we explain that where a precisely equal structure of contributions operates in the reserve scheme the ultimate beneficiaries will not get the benefit of the tax concession?

Sir K. Joseph: Because, as I explained, there is a substantial difference between a recognised occupational scheme, voluntarily entered into by the employer who is free to divide the contributions as he thinks fit, and a compulsory reserve scheme imposed upon employers where the natural distribution would be half contributions from the employer and half from the employee but which we have altered to favour the employee.
My hon. Friend the Member for Billericay properly asked what the Government understood to be the views of the pensions interests. I have had reported very carefully what those views are. Within the pensions industry differing views are held on whether the Government would be right to withhold tax relief on employees' reserve scheme contribu-

tions. I must make it clear that there has been no attempt so far as I am aware by the pensions interests to mount a campaign against the allowing of tax relief.
Indeed, the Life Offices Association has told me specifically—I have the same quotation as my hon. Friend—that it regards this as a matter for political decision and does not consider it appropriate for it to exert pressure on the Government one way or another. Representatives of the National Association of Pension Funds have told me—this is an argument against me, and I emphasise this—that they are in favour of allowing tax relief on reserve contributions. They believe, however, that the balance between the reserve scheme and recognised occupational schemes would be unsettled by allowing tax relief and would only be restored by offering further encouragement to occupational pension schemes to develop.
This is not a group of people selling pension schemes. The National Association represents firms that already have occupational pension schemes. The CIB Society of Pension Consultants has told me that it would regard the Government's acceptance of tax relief as representing so fundamental a change as to constitute a severe setback to the successful implementation of the Government's policy by the due date. There is, therefore, considerable disagreement, but no pressure on the Government whatsoever.
Whatever the views of these organisations on the merits or otherwise of the Government's case, none of them has said anything to upset our belief that amending the Government's original proposal, to allow tax relief, would in practice mean that there were many more, perhaps millions more, reserve scheme members than would otherwise be the case.
This is a complex subject. I am going to bring all the factors which I have raised and which hon. Members have so far raised into focus on the issue before us.
10.30 p.m.
First, will our decision make any difference to the welfare of the wage earners when they are retired? My hon. Friend the Member for Billericay is an expert on the subject, but I am going to venture to question the degree of his realism in some of the judgments he has made. I will explain to him and the


House why. Let us, on what is common ground, agree that, whatever we decide tonight, some millions of people will be in the reserve scheme. Let us agree that, whatever we decide tonight, some millions of wage earners will be in recognised occupational schemes. So the issue is how the mobile mass in the centre who are not destined, as it were, inevitably for one or the other will be distributed, as a result of our decision tonight, between the reserve pension scheme and recognised occupational schemes.
Before we can comment on how that distribution will go we have to ask ourselves who will make the decision about scheme membership. It is not we who will make the decisions. It is the innumerable employers, large and small, who will have to make the decisions, not the Government. I put to the House the view that the decision we make tonight will crucially affect the decisions made by myriads of employers. The employers who will be affected above all are those cost-conscious employers who have not at the moment got occupational schemes, or whose occupational schemes do not cover all their workers, or who have an occupational scheme which is not good enough to qualify for recognition. My hon. Friend the Member for Billericay must recognise that those will be relatively, by hypothesis, the hardest group of people to persuade to have recognised occupational schemes. They are the very people who have not so far in general done so.
My hon. Friend the Member for Billericay, with all his expertise, referred to the group who could be taken into the reserve scheme if tax exemption were provided as mainly small employers with small numbers of employees, but I must emphasise that that is the wrong picture. The largest group of employees who would be, as it were, at risk as a result of our decision are the shop floor workers of middle-sized employers or substantial employers. Why is that? I will try to explain. To seek recognition will involve employers—by hypothesis, employers who at the moment have not got very good schemes—in heavy administrative burdens and extra costs. They have to face contributions at 2½ per cent.
anyway if they go into the reserve scheme; to satisfy the tests for recognised occupational schemes they will have to pay contributions, I would

say in most cases, more than half of probably more than 4 per cent.
My hon. Friend the Member for Kensington, South will assert, correctly, when he replies to the debate that with interest rates at their present level it is possible for the recognition tests to be satisfied by a contribution which at the moment would add up to 4 per cent. or perhaps slightly less. I would ask him and the House to accept that no employer in his senses would depend upon interest rates remaining at this level throughout the period of his occupational pension obligation. We would estimate that with contributions for employer and employee the contribution would be between 4 per cent. and 5 per cent. at least.

Mr. Cunningham: No worse off.

Sir K. Joseph: The hon. Member says he will be no worse off. It depends on the distribution of the contribution. If we leave things as in the original Bill, with no tax relief, an employer with a recognised scheme could divide a contribution of say 4½ per cent. into 2½ per cent. on his shoulders and 2 per cent. on the employee's, which after tax deduction, would be 1½ per cent. This would be about the same as the employee would pay in the reserve scheme. So the employer would be able to say to his employees "You will be better off, because we will provide better benefits and you will pay no more."
If we provide for tax exemption in the reserve scheme—by hypothesis we are talking of employers who are not particularly keen to have occupational pension schemes or, anyway, not to have more than they have to pay for—the cost to the majority of wage earners will be about 1 per cent., and all that the employer in an occupational scheme will be able to put on his employees will be about 1½ per cent., which, after tax deduction, would come down to 1 per cent. Recognition will, therefore, impose on the less-than-enthusiastic employers, or the big employers who have not at the moment got their manual workers in a good occupational scheme, a heavier contribution than they would face in the reserve scheme and perhaps a heavier contribution than they would be willing to face.
I was asked to recognise that the employer will not be alone in thinking that the reserve scheme, with tax exemption, will be very seductive. A lot of employees on the shop floor are interested not in pensions when they retire but in minimising the deduction from their wage packets. Hon. Members on both sides of the House know that. If hon. Members are inclined to pray in aid trade unions, I accept and acknowledge that some trade unions are extremely active in this sphere, but alas they are still a minority.
Many trade unions will back up the majority of their members on the shop floor and say to the employer "If there is this tax exemption in the reserve scheme it will minimise the cost. All you have to do is to go for the reserve scheme and it will cost our members who pay tax only 1 per cent.". But we must bear in mind that the poorest of their members who do not pay tax will still be paying 1½ per cent. They will not get a penny benefit from the amendment moved by my hon. Friend the Member for Kensington, South.
The Government are seeking to be fair to the members of the reserve scheme. I have explained how we arrived at a disproportionately small contribution from employees in recognition of not providing tax relief. The Government are seeking at the same time, in the interests of wage-earners, to maximise the membership of recognised occupational pension schemes.
We must face the fact that the employers whom I have described—those who, in pension terms, are not particularly interested, who are cost-conscious more than pensions-conscious, who have no pressure from the shop floor and rarely any pressure from the trade unions —will tend to surge towards the reserve scheme if we provide tax exemption for contributions into it. [Interruption.] One hon. Gentleman says "So much for private enterprise."
I noticed that my hon. Friend the Member for Billericay seemed to indicate slight disagreement with the last part of my argument. He is a realistic man who has been in the insurance world for some time. Surely he will acknowledge

that the task facing those who wish to expand occupational pension schemes will be made substantially harder if tax exemption is given to the reserve scheme with the result that, as he said, many more people—I should say more millions of people—will be in the reserve scheme.

Mr. Dell: May I put one point to the right hon. Gentleman which I hope he will not think is technical? It is agreed that about 5 million of these persons who are in the reserve scheme will be taxpayers and that the amount of tax involved would be about £25 million a year —in other words, on average, £5 per person per year. Is the right hon. Gentleman saying that all these dramatic consequences for his strategy—this great surge towards the reserve scheme, this complete undermining of the whole concept of his strategy for pensions—depend on an average of £5 per person per year?

Sir K. Joseph: Sad though it be to acknowledge that people should be so short-sighted, I assure my hon. Friends that I have evidence for saying that that will be the effect. Providing tax exemption will, in the view of the Government —and I ask my hon. Friends to heed this —deprive millions of wage earners of the likelihood of being in recognised occupational pension schemes and not add a penny of benefit to the pensions of those in the reserve scheme. The reserve scheme will be much increased in numbers.
The reserve scheme is a necessity for those who believe in the strategy that the Government have outlined. Some will have a chance of a second pension only if they are in the reserve scheme, but it was not the Government's object or purpose to enlarge the reserve scheme beyond need by tempting into it people who should be looked after by the private sector in occupational schemes.
Finally, I refer to the cost. If the tax exemption is provided, there will be a loss of £25 million revenue. This will not be taken from the employees' benefits, because of the extra contribution in the reserve scheme that we are providing from employers. It would be very odd if a number of my hon. Friends who are particularly worried about the balance between Government revenue and expenditure were, without realising it, to increase potential financial problems in the future to the tune of £25 million a year.

Mr. George Cunningham: If the right hon. Gentleman's strategy is successful people will be shifted into occupational pension schemes and £25 million tax relief will be given.

Sir K. Joseph: Yes, but it is the substance of my argument that if the House maintains tax exemption the £25 million will be lost and, even more serious, millions of people who could be given improved benefits in recognised occupational pension schemes will not get them.

Mr. McCrindle: Does not my right hon. Friend concede that all that he has been saying presupposes that the occupational pensions industry will not, or cannot, respond in the way that I tried to outline?

Sir K. Joseph: I am sure that it will try to respond, and I admire its capacity to respond, but I think the House will be erecting, perhaps, ironically, with my hon. Friend's support, very difficult barriers.
I have tried to explain why the marginal employer, even the big employer who is hard-headed and cost-conscious, persuaded by his shop floor personnel and trade unions, will be tempted into the reserve scheme. I ask the House, and particularly my hon. Friends, to reflect on our purposes. The Government are making a deliberate attempt simultaneously to be fair to those in the reserve scheme and to encourage, in the interests of wage earners themselves, the maximum membership of recognised occupational pension schemes. It would be extraordinary if, with the best of intentions, my hon. Friends were to deprive several millions of wage earners of the decent, recognised occupational pension schemes for which their jobs are suited, without adding a penny to the benefits of those in the reserve scheme.
I hope very much that the House will not accept my hon. Friend's amendment and that it will accept the amendment eliminating subsection (7).

Mr. O'Malley: The House of Commons has been discussing the various aspects of this Social Security Bill since November last year. Throughout the many proceedings on the Bill there have been deep differences of opinion and of principle between the two sides, but when the difference in the treatment of

members of the reserve pension scheme and of occupational pension schemes came before the Committee this issue, like so many others, was examined in great detail.
The Minister stood virtually alone, and it was that situation which created the majority which was successful in Committee. As a result, the Government and the Secretary of State have come forward with a proposal to overturn a decision taken by a large majority in Committee. On that occasion there was a genuine extending of hands across and co-operation between the two sides of the Committee. The decision was certainly not a party political one. It was taken by a number of hon. Members in full possession of the facts, who saw their responsibility to the public as providing equity between one citizen and another.
10.45 p.m.
It was only at almost the last point in his speech, almost accidentally, that the right hon. Gentleman brought to the attention of the House one of the factors which have led to his being placed in this difficult position. If any Government were looking for a Minister to put forward an impossible case, the right hon. Gentleman would be among the contenders at any time. He made the best of a very bad case.
Two general considerations should be noted before dealing in detail with the right hon. Gentleman's speech. First, throughout the history of this House there has been a continuous tension, and in many periods a conflict, between the House and the Treasury. Behind the Secretary of State tonight stand the mandarins of the Treasury, who have clearly told him that they will not accept an amendment, although it succeeded in Committee, which would cost the Treasury £25 million in a full year.
Once again, therefore, we must decide how we are to react to the pressure of a decision taken outside the House, within the Treasury, not by a spending Ministry, and certainly not by the House of Commons. It would be a negation of the historical rôle of Members of Parliament if we did not take that factor into account, which was omitted by the right hon. Gentleman. Of course one understands why such things are not said by


Ministers, but every hon. Member knows the realities of a situation in which a Government have to come forward with an amendment like this, particularly when there is deep feeling which is shared by their own Members.
The second general consideration is this. The right hon. Gentleman, in a complicated speech detailed the figures supplied by the clerks, accountants and actuaries. Are we, as the House of Commons, always to give priority to the arguments of the actuaries when an issue of equity between one citizen and another is at stake?
Stripped of everything, the issue is simple. If we accept the Government's amendment to take away tax relief on contributions into the reserve shceme, we shall be telling 7 million people that, in providing for an income in retirement and old age, they will not have the tax advantage which another section of the community will have. It is a fundamental principle of tax policy that there should be similarity of treatment between one citizen and another. If the Government's amendment is accepted, there will not be that similarity.
There will be this inequity not not only between members of occupational schemes and members of the State reserve scheme—and we should remember that it is not the employee's decision whether he should be in one or the other —but among members of the reserve scheme themselves. Large numbers of men and women will move in and out of the reserve pension scheme. From the fast ball which my right hon. Friend the Member for Birkenhead (Mr. Dell) bowled to the Secretary of State it became clear that the inequity was not merely between the occupational pensioner and the reserve pensioner; it is even within the reserve pension scheme itself.
Looking at the general position, it is important, too, that if the Government are successful in inflicting this difference of treatment between one citizen and another it will be women who suffer in the majority. Many of the members of the reserve scheme will be the lower-paid in the community—who are women. The Secretary of State shakes his head, but I suggest that he studies his own papers

on this subject. I thought that this was a matter of general agreement on both sides of the House. It is certainly not a party-political point. It is in the nature of the wage structure and our kind of economic system. I was merely noting that women will form the majority under the reserve scheme.
Hon. Members should take into account that this is not only an inequity between one citizen and another in difference in tax treatment, it is women who are at the receiving end of this inequity in very large numbers.

Mr. J. R. Kinsey: The hon. Gentleman is arguing closely that we get inequities in taxation between the two schemes, but has not this been redressed in the matter or contributions to the schemes?

Mr. O'Malley: I shall deal with that point. The Secretary of State made it one of the lynchpins of his argument. If the hon. Gentleman will excuse me, I shall come to that point later.
The Secretary of State began by expounding a philosophy shared by the whole Conservative Party. I am not attacking that tonight. I am looking at the situation. The Secretary of State said that the Government believed that the more people who were in occupational pension schemes the better it would be for them. Therefore, the Government want to encourage the growth of such schemes. That is the view of the hon. Member for Kensington, South (Sir B. Rhys Williams), the hon. Member for Billericay (Mr. McCrindle) and others who have been very active in these discussions.
The Secretary of State also said that the Government recognised that it would not be every man and woman who would have the opportunity to belong to such a scheme and that it was for that reason, therefore, that the reserve scheme is to be set up. Having said that, however, the right hon. Gentleman said that it was the Government's desire to encourage maximum membership of occupational schemes with the reserve scheme as a fallback scheme. It was implied that if the reserve scheme were given this tax advantage of £25 million a year, that sum would destroy the whole competitiveness of the life offices, insurance companies and the private occupational pension schemes.
The Secretary of State was answered by the hon. Member for Billericay by his quotation of the communication from the life offices about their attitude. They know that they do not need, as a prerequisite for their success, a treatment of the reserve pension scheme as shabby as is proposed by the Government.
I do not need to answer the Secretary of State. The debate cuts across party-political boundaries. It is not a matter of taxation or equity. That part of the right hon. Gentleman's speech was answered even before he made it by his hon. Friend the Member for Billericay. The hon. Member for Billericay said that he was sure—apparently the life offices are sure—that the life offices can compete with the reserve pension scheme.
Before the last General Election the Secretary of State was an arch-disciple of the virtues of competition and the belief that private enterprise could compete with anything. We are not arguing about that. There is no difference between the two sides on that issue because of that difference of philosophy between the parties. The hon. Member for Billericay said that the life offices, the insurance companies and the occupational pension schemes were well able to compete. This is not the time for me to repeat any attacks on the reserve scheme, but let us examine the benefits which will be paid out under the reserve scheme. Any insurance broker would say that it would be relatively easy to provide the type of benefits which would come from the reserve scheme for less than 4 per cent. which the hon. Member was speaking about.
The hon. Member for Kensington, South has indicated that he knew that at least one organisation was able to provide benefits at the minimum level of 3½ per cent. I know the reasons for that, but it makes the point. The first point that the right hon. Gentleman the Secretary of State raised on this general argument of equity must concern every Member of Parliament, whatever his political philosophy. The hon. Member for Billericay put a stick of dynamite under the Secretary of State's first argument. Frankly, the Secretary of State is in an invidious position because he has not got a valid set of arguments to advance and that is why it is obvious

that there has been pressure from the Treasury.
The second argument which the Secretary of State used—I am trying to pull out the basic issues and put them into simple terms—was that the employer is paying 2½ per cent. and the employee only 1½ per cent. He said that if there was to be a tax concession there would need to be a change so that it was a 50/50 split. On this issue of the split between employer and employee contributions, I need go no further than the occupation pension scheme which we as Members of Parliament contribute to. It is not untypical of the situation outside. Current practice is not a 50/50 split. Current practice in this country and, as I understand it, in the EEC is that the employer pays a significantly bigger proportion of the contributions than the employee. That is certainly the situation in the case of white-collar workers, and that is important in view of the likely composition of the reserve scheme.
The Secretary of State cannot say, therefore, that if there is to be a tax concession there would have to be a 50/50 split. He cannot say that the reason for the 2½ per cent.—12½ per cent. split in contributions is that there was no tax relief. That is rationalisation after the event. That is an argument dragged after the event, as he well knows. It is not true that the result of this split is that there is a £40 million subsidy from employer to employee. If I were the right hon. Gentleman I should have something harsh to say to the civil servant who gave me that argument to use, because it is simply intolerable.

11.0 p.m.

Sir K. Joseph: I have to assert yet again that the reasoning I gave to the House was not ex post facto rationalisation. It was the chain of reasoning by which the Government arrived at the uneven split that I have described. My speech was very much my own, including that argument.

Mr. O'Malley: I accept that, because we all, on both sides, accept that the right hon. Gentleman is an honourable man, and I am not calling his reputation into question. The issue is far too important for millions of people far into the future for us to become involved in that kind of argument.
Whether it was a rationalisation after the event or not, it is not a starter as an argument. Anybody who knows anything about occupational pensions practice in this country knows that.
The third thing the right hon. Gentleman said was that the contributions for the basic pension were not tax-deductible. But there is equality of treatment in the basic pension; all citizens who make those contributions are treated alike. It will not do to say that setting up an occupational pension scheme is voluntary, whereas membership of a reserve scheme is compulsory, because there is no choice for many millions of men and women. They must be in one or the other. It is the employer who will take the decision, whatever consultations may take place— and they will take place in good firms.
It will be an accident of his employment which type of scheme a man is in, an occupational pension scheme on the one hand or the reserve scheme on the other. As a result of the Bill all members of the community will be a member of one or the other. There is no choice. If they are in recognised pensionable employment they will have to be in an occupational pension scheme or the reserve pension scheme. Therefore, the right hon. Gentleman's third argument falls.
The right hon. Gentleman then asked whether the subsection would benefit wage-earners when they retired. He said that it would not add a penny of benefit to what they received. But it would give them the tax benefits over the whole period in which they were making contributions—perhaps 5 million or 6 million of them out of 7 million. For the whole of their working lives there would be contribution benefits. It is a matter for conjecture as to what would be the final effect on the fund over a long period. But the basic argument is the simple one of equity between one section of the community and the other.
The right hon. Gentleman closed by telling his supporters—he had to draw out a last desperate card; it was a sorry position to be in—that if the Government were defeated on the amendment the Bill could not be brought into effect.

Sir K. Joseph: I only said that if hon. Members tried to inject more money into

the reserve scheme and, therefore, we had to change the recognition test, that would put the date into danger.

Mr. O'Malley: That was not the only thing the right hon. Gentleman said. In any case, even if that were so, what we have been arguing continually for five months is that the criteria are minimum criteria, and the effect, if there is to be an effect, would be one of a maximum of £5 a year on the individual.
When we are dealing with pensions subjects, too often a minority of people acquaint themselves with all the complexities. One becomes what a former Secretary of State has described as "pen-sioneers". Other hon. Members, daunted by the complexities and the actuarial and accounting arguments, tend to leave it to the pensioneers. But when we have dealt with all those arguments, we still have a responsibility to the House to decide as individual Members whether there is fairness of treatment between one citizen and another.
As it is manifest that there is not equality of treatment or equity between one citizen and another, I hope that the whole House will defeat the Government. I say that on no party-political basis. I should not try to claim credit for one party if the Government were defeated tonight. If we did that we could hold our heads high as Members, believing that we have fulfilled our traditional and historic rôle in maintaining the interests of all our constituents, of all the citizens of this country, rather than creating one class of citizen with one kind of tax treatment and another with a markedly inferior kind of tax treatment.

Sir Robin Turton: I have considerable sympathy with my right hon. Friend in the arguments which he has addressed to the House. However, I was rather disturbed when he attacked my hon. Friend the Member for Belper (Mr. Stewart-Smith) for introducing a tax principle which certainly for 266 years had been immutable—namely, that if a benefit is taxed the contribution is tax deductible. Against that, my right hon. Friend referred to the basic pension, but he and I and the whole of the Conservative Party fought hard against that breach of principle in 1965.
It ill becomes the hon. Member for Rotherham (Mr. O'Malley) and his right hon. and hon. Friends to bring forward the argument that the basic pension treats all alike. This is a vital matter which I hope my right hon. Friend will consider. It must be put right, otherwise I fear that there will be further inroads into the principle when a Labour hon. Member— it will probably not be the hon. Member for Rotherham—becomes Chancellor of the Exchequer. That is why I hope that my right hon. Friend will reconsider his attitude to the amendment.
I am a trustee of the Members' Contributory Pension Fund. The trustees decided that there should be a contribution proportion of five to three. Equally, our contributions are tax deductible. I find it hard to support my right hon. Friend in his argument when my constituents, many of whom are agricultural workers or building workers, will not be allowed to deduct their contributions to the reserve scheme whereas those who are employed by local authorities, or the neighbouring ICI plant, will be able to do so. I suggest to my right hon. Friend that this is a matter that warrants rather more mature reflection.
This is a taxing matter and not a pension matter. That is why I have sympathy for my right hon. Friend. He is put in an invidious position. This is the sort of matter which is dealt with in a Finance Bill. Of course, it will be some time before the taxing provisions will take effect.
I have always taken the view that the right way to treat contributions and pensions is the reverse of what we have had in the past. I believe that a working man or woman should not be able to deduct tax from the contributions but should have a pension that is free of tax. To my mind hardship is at present suffered by men and women who after a working life receive a pension and find that their pension, although it is small, is eroded by taxation. No changing of the tax exemption limits can keep up with events.
I received a letter only this morning from a railway pensioner. He receives an annual pension of £583 and an annual railway pension of £267. Yet that man is paying a tax deduction of £1·50 every

four weeks, being paid on a four-weekly basis.
I cannot think how in a civilised community we can allow pensioners on low incomes to be taxed in that way. Therefore, I suggest to my right hon. Friend that he should undertake to consult the Chancellor of the Exchequer on the whole question of the principle of the deduction of tax from contributions and on whether contributions or pensions ought to be taxed. The matter could well be considered by a departmental committee in time for the next Budget.
If we could get such an assurance there would be no need for this subsection at present because the matter could be dealt with in a Budget. But I insist that we cannot argue on the five to three basis and say that it should be otherwise, at 50-50, when we, as Members of Parliament, are enjoying the five to three ratio. The principle of this matter is rather more important than the detailed arguments, and I hope, therefore, that my right hon. Friend will reconsider this issue.

Mr. George Cunningham: I confess to mixed feelings in that the seed I sowed in Standing Committee has grown to such a sturdy plant tonight. But I am delighted that the case which, I recall, I had to fight for hard in some quarters—including the rules of the House because it was almost out of order—is now so universally accepted, except by the Government.
The Secretary of State said two conflicting things. First, he said that if my amendment is allowed to remain in the Bill enormous changes will be required throughout the whole strategy.

Sir K. Joseph: Sir K. Joseph indicated dissent.

Mr. Cunningham: If the right hon. Gentleman did not say that, it helps my case. He also said that if the Government did not get their way there would be no alteration to the 2½/1½ split. So the issue is narrow. It is whether the employee pays 1½ per cent. and gets tax relief or whether he pays 1½ per cent. and does not get tax relief. It does not affect the employer at all. Whether he gets that tax relief or not, the employer will pay the same either way.
My case is not to the party advantage of the Opposition. The best thing for the


Labour Party would be for the Government to get their way tonight and incur all the opprobrium for it, with us getting all the credit. Hon. Members opposite who support our case would not get the credit, but that is life this side of Heaven. The Conservative Party would get the opprobrium and we would get the credit. So, in trying to get the Government to change their minds, we are not acting for our party interest. I hope that that will make it easier for hon. Members opposite to do what they should do.

Sir K. Joseph: In view of the occasions when right hon. and hon. Members opposite make policy commitments for their party without consulting their Leader or the Shadow Cabinet, may we know from the Opposition Front Bench whether there is any firm commitment by the Opposition on the subject? The hon. Member for Rotherham (Mr. O'Malley) said nothing about it.

Mr. Cunningham: The Front Benches must speak for themselves. I only ever speak for myself. But one thing I can promise is that the Opposition Front Bench had better do this when it returns to office or it will get Ten-Minute Rule Bills practically daily on this issue. That much can be promised.
11.15 p.m.
The administrative difficulties that have been advanced have not been made much of tonight, but they were earlier before they were knocked down. The Minister argued that to adjust people's codes to take account of their contributions to the scheme would be administratively difficult, and, of course, it would. But in occupational pension schemes no adjustment of codes is required. The employer is told to knock off the contributions under the net pay arrangement and to apply the tax arrangements to the net pay. There is, therefore, no administrative difficulty for the employer. That has been admitted by the Minister in answer to questions from me.
I stress the comparison with our own pension scheme for Members of Parliament which was mentioned by the Father of the House the right hon. Member for Thirsk and Malton (Sir Robin Turton). The comparison is more direct and compelling than he suggested. When Lord Boyle put forward the change in 1971 from 50/50 to 3/5, he did so by referring,

first, to the proposal for the State reserve scheme and, secondly, to normal practice outside. It is not just an accident. The two ratios were tied up from the beginning, but there was no reference then to the possibility that one would attract tax relief and the other would not.
Some play has been made of the fact that the basic scheme and the graduated scheme contributions do not attract tax relief, but in the basic scheme there is a Treasury input of 18 per cent. I agree with the Father of the House that the Labour Government were wrong in 1965 to take away the tax relief. As a quid pro quo they offered an increase in personal allowances, but that was insufficient.
Eighty-one per cent. of the graduated pension contributions go to sickness and unemployment benefits which are not taxable. Therefore, in accordance with the known principle, it is legitimate that contributions should not attract tax relief. When the Conservative Party was in Opposition it was not a few back benchers who enunciated and supported the principle of tax relief on pension contributions. The present Secretary of State put his name to a motion to that effect, and the Under-Secretary of State spoke most eloquently on the subject and said what terrible things the Labour Government were doing. That view was also forcefully expressed by the present Secretary of State for Education and Science, who was then the official spokeswoman for the Opposition.
Given that background, I suggest that it is a matter of simple fair dealing and decency, and in the context of the pension scheme for Members of Parliament a matter of honour. The House should vote in favour of people being treated equally in essentially similar circumstances.

Mr. Geoffrey Finsberg: I have tried to listen carefully to the arguments, but I remind the hon. Member for Rotherham (Mr. O'Malley), who complained about chattering on the Government Front Bench, that he is equally guilty.
I have not served on the Standing Committee, but I am interested in this subject not because I am connected with pensions but because my instinct


from a close involvement in personnel management over more than a decade leads me to believe that employees who were forced into the State reserve scheme because their employers did not wish to operate a new occupational pension scheme would rightly feel themselves prejudiced and hard done by if there were no tax relief on their contributions.
I listened carefully to my right hon. Friend the Secretary of State, but he has not yet convinced me of the force of the Government's argument on this point. However, I do not think that the amendment moved by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) is one which I can support, because it introduces a different principle. I listened attentively to my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton). What he said is basically the line which I hope will commend itself to the Government. They ought to think again about this, because there is a fundamental matter of principle involved.
The Bill underwent certain alterations in Committee affecting the terms of tax relief and cutting right across party lines. The principle is a good one that if anyone is made to pay a contribution towards a pension in a State reserve scheme there is no equity in the argument that because he is unfortunate enough to be in a State reserve scheme he cannot get relief, whereas he could if he were in an occupational scheme.
If my memory is right, one of the "outs" in phase 2, apart from the £1 plus 4 per cent., is an improvement in pension terms. I have bargained with trade unions for more than 10 years, and I have a rather higher opinion of their bargaining abilities than the national Press. I am certain that any good trade union which has built up enormous funds in equities, like Municipal and General to name only one, would seize upon this point and say to an employer "Although you may be said to be cost conscious, you know that it is in your interests to have a contented work force by getting your employees into a good occupational scheme, and we believe that as part of this year's bargain you should introduce an occupational scheme." I have negotiated long enough with major trade unions to know how they think. I am

certain that this is a line of argument which would appeal to them.
I am not sure that my right hon. Friend the Secretary of State is right when he says that employers would seek to find the cheapest method possible and that the unions would not "encourage" them to do something else. My practical experience does not lead me to share his view.
Where do we go from here? We have to say that the argument falls into two sections. First, there is the section of difficulty. I heard my right hon. Friend say clearly that there would be great administrative difficulties if the Government did not have their way and were not able to delete this provision from the Bill. He did not say that it would make the whole scheme impossible. He said there would be administrative difficulties. A Government who have found it possible to introduce annual upratings of pensions ought not to say that there would be administrative difficulties in doing what they are asked to do.

Mr. George Cunningham: There simply are not any, in any event.

Mr. Finsberg: It would help my argument if I were allowed to complete it. I do not think that the hon. Gentleman is right. There are administrative difficulties, but they are capable of being overcome, given the ingenuity of my right hon. Friend the Secretary of State and that of my right hon. Friend the Chancellor of the Exchequer, who has overcome far more difficult administrative problems.
Speaking for a moment on behalf of a section of the retail trade, I well remember hearing it argued week after week by Treasury spokesmen on behalf of Customs and Excise that it was not possible to establish a general sale or return basis during the period of transfer from purchase tax to VAT. The argument of administrative convenience falls to the ground.
The second argument I put forward is that I believe that this is a fundamental test of Conservative philosophy and principle. In the years during which I have tried to follow such a philosophy I have not believed that it was our policy either to perpetrate or to introduce inequity in taxation. I thought that our whole policy was to get more fairness


into taxation. Up to now I do not think that my right hon. Friend has convinced many people that what he is asking us to do would be equitable.
I say to him and my hon. Friend the Member for Kensington, South, that the way out of this dilemma is to follow the suggestion of my right hon. Friend the Member for Thirsk and Malton and for both my right hon. Friend and my hon. Friend to withdraw their amendments. Then, when the Bill proceeds to another place, following consultations, a suitably drafted clause could be introduced. We are always told that Government-drafted clauses are better than priavately-drafted ones, and we accept that.
My right hon. Friend must have sensed the feeling, certainly on these benches, which is pretty strong. None of us would wish to embarrass him because in the context of this magnificent measure this is a small item but it is one which is linked with all the philosophy and principles of Conservatism that I have known.

Sir K. Joseph: I hope that my hon. Friend will give some heed to my strong belief that this is not a small matter in the context of the Bill but will shift millions from occupational schemes, which could be good and improved over the years, into a reserve scheme.

Mr. Finsberg: I naturally pay due attention to what my right hon. Friend says, but I am in this difficulty. I think my right hon. Friend will admit that he is not a pensions expert. I have heard him read out the view of the Life Offices Association, which is contrary to that which he has expressed. This is a genuine dilemma. The argument so far put forward is slightly less convincing than I would have wished. I hope that in the rest of the debate on these amendments the Government will think again and accede to the strong feelings in the House and the country.

Mr. Norman Lamont (Kingston-upon-Thames): The hon. Member for Islington, South-West (Mr. George Cunningham) said that the issue before the House was a narrow one. It is often the case that the most important issues arise in the narrowest of forms. No one, after the leading article in The Times and the

other Press comment of recent days, can doubt that this is an extremely important subject. Although I have listened carefully in Committee and tonight to what the hon. Member has said, I still believe that the Government's policy on this is logical and equitable.
11.30 p.m.
It is generally accepted that it is a legitimate and normal use of the taxation system to give incentives to attract money into what are thought to be socially desirable goals. That is the principle behind tax relief on life insurance premiums and on mortgages. Sometimes also the taxation system discriminates between the private sector and the public sector. There are tax incentives to persuade people to invest more money in Government securities than in other securities. The taxation incentive given in this Bill is designed legitimately to encourage people to put their savings into private occupational schemes.
The question being asked is: why should somebody who, through no fault of his own, finds himself in the State reserve scheme be penalised by having no tax relief? But surely the way in which the contributions are split under the Bill —the considerably smaller contribution for the employee than for the employer— helps to deal with that point. The employee's contribution is below the 50-50 split that one might naturally expect.
The hon. Member for Rotherham (Mr. O'Malley) and some of my hon. Friends question whether the 50-50 split between employer and employee is the natural one and point out that in many occupational schemes the employer pays a much bigger proportion of the total contribution. But one cannot compare the State reserve scheme with an occupational scheme in precisely that way. An occupational scheme is essentially part of a total remuneration package. Whatever an employer decides to give his employee by way of contributions into a pension fund can be balanced against the salary of that person and other fringe benefits he may choose to give him. In that sense contributions to an occupational pension scheme are different from contributions made into the State reserve scheme, many of whose members will move in and out of the scheme and between employments.

Mr. George Cunningham: Any pension contribution by an employer is part of the remuneration of the employee and is part of the cost of the operation falling on the employer. But the hon. Gentleman tended to skate over what is, as he said, natural. Will he agree that, as a matter of fact—and I can give him copies of the Minister's letter to me because the full facts are not in the actuary's report—it is not just a question that in some or many occupational schemes the employer pays more. The aggregate of the contributory schemes in the private sector is that the employee pays 33·6 per cent. of the total, which is far below what is proposed in the State reserve scheme.

Mr. Lamont: I take that point, and I accept that the hon. Gentleman's facts are accurate. But there is a clear difference in principle in a voluntary decision to set up an occupational pension scheme, which demands costs and management time from an employer. It is an essentially different decision to allow an employee to join a fallback reserve scheme. The hon. Gentleman disputes whether the 50-50 split is the natural split, but it was, I suspect for similar reasons, decided upon in the Crossman pension scheme. That scheme came down in favour of a 50-50 split in contributions between employer and employee.
If it comes to a choice between a 50-50 split between an employer's contribution and an employee's contribution with tax relief and, as in the Bill, a 62½–37½ split without tax relief, one might ask: what is the difference? They add up to much the same thing. Is the difference purely cosmetic? I do not think so. There are genuine positive advantages in having the provisions in the Bill. They will help the low-paid worker who will not benefit from tax relief. We are told that it is only up to 2 million out of 7 million people in the reserve scheme who will benefit from this. By my mathematics that is some 28 per cent. of the people in the State reserve scheme. That, to my mind, is not an insignificant amount, and I believe the arrangement in the Bill to be of real benefit to them. That is not to be ignored.

Sir B. Rhys Williams: Would it not be best to adopt something on the lines of my new Clause 10?

Mr. Lamont: I was hoping my hon. Friend would not divert me to that subject. If he accepts the principle of his amendment he cannot very well disagree with the principle I have stated and what is incorporated in this part of the Bill.
The argument has been put that not to give tax relief somehow means that the reserve pension scheme is being deprived of money, that it is £25 million underweight, but, as the Secretary of State made clear, we ought to emphasise that to give tax relief will not result in any more money going into the State reserve scheme.
One has also to remember that in framing this strategy the Government seek to achieve a balance between the State reserve scheme and occupational pension schemes. Tax relief is not the only factor in that balance. The level of contributions is one, and the level of benefits is another. The relationship between the 4 per cent. contribution requirement in the State basic scheme has to be compared with the 5 per cent. contribution rate in private money purchase schemes. We can argue about that 4 per cent. and about how it ought to be made up between employer and employee, but the balance between the 4 per cent. figure and the 5 per cent. minimum standard for private money purchase scheme cannot be disturbed without undermining the whole basis of the Government's strategy.
The object of the Bill is to ensure the maximum possible development of occupational pension schemes, and that is an aim of which I certainly heartily approve. It is very easy to underestimate the difficulties which confront employers in deciding whether to set up occupational schemes by 1975. That is not so far away for those who have no experience of setting up occupational pension schemes. The power of inertia is very great, and it is only necessary for employers not to do anything and at the end of the day all employees will automatically be in the State reserve scheme. To set up an occupational pension scheme demands an investment of management time, an actuary's report, collecting data for employees, and extra


administrative costs. To take away the advantage of tax relief which the occupational schemes will enjoy, as the Government envisage, would tip this balance the other way.
I am supported in that opinion by many employers. I know it is the opinion of the CBI because, like other Members on the Standing Committee, I received copies of correspondence between the Confederation and the Secretary of State's Department. I know it is the CBI's opinion that if tax relief is given to the State reserve scheme many employers will not think it worth while to develop occupational schemes.
I had this morning also a letter from the National Federation of Building Trades Employers saying very much what the CBI said. It said:
If the large number of employers in building arc to be encouraged to adopt occupational schemes instead of the State reserve scheme a careful balance must be maintained between the costs of the two schemes.
The proposals in the Bill, as originally drafted, meant that there was very fair balance and in consequence a good chance of persuading employers to pay the small extra amount necessary to set up occupational schemes better suited to their own requirements.
The National Federation goes on to say that if tax relief is given for the State reserve scheme it will strongly influence employers in the industry against the setting up of occupational schemes.

Dr. Tom Stuttaford: Does my hon. Friend agree that the CBI said that it appreciated the difficulty of arguing against the logic that the reserve scheme contribution should be treated on the same footing, so far as tax is concerned, as occupational pension scheme contributions and that this is much the same as what the Norwich Union, a reputable firm, told me yesterday—namely, that, although it may cause administrative difficulties, the firm could see no moral justification for having two schemes: one where the poor person had no tax relief and the other where the richer got tax relief? It is a sort of Robin Hood in reverse: penalising the poor and giving advantages to the rich.

Mr. Lamont: My hon. Friend cannot expect me to comment upon what the Norwich Union told him. That is beyond

me. [HON. MEMBERS: "The CBI."] Everything in good time. My hon. Friend cannot expect me to comment on what the Norwich Union told him, as I was not present. I do not believe that what I said about the CBI's letter misrepresented its opinion in any way. When I received this letter I rang the CBI's Director of Social Security to confirm that this was the CBI's opinion, and I know that it feels very strongly about this matter.
I believe that it matters whether the State reserve scheme has 7 million or 9 million employees in it. I leave aside the question of the difficulties of running such a large State reserve scheme and the problems that that may pose for our economy as a whole, though they were recognised by hon. Members on both sides in Committee.
I will explain why I believe that we should keep the State reserve scheme small. In the past we have all seen how difficult it is to persuade Governments with national insurance schemes to improve their conditions. We are always up against political problems and the situation that an increase in contributions will have an inflationary effect across the whole of industry and of industry's costs. But I suspect that what it is difficult for a Government to do it will be easier in future for individual employers to do. If we can get the Bill through and get the trade unions to take a greater interest in occupational pension schemes than they have in the past, I believe that we shall be able to apply much greater and more successful pressure for the development of a proper level of pension.
I believe that the reasons for withdrawing tax relief from the State reserve scheme, although intricate and easily misrepresented, are logical, equitable and necessary.

Mr. Nicholas Edwards: Unlike my hon. Friend the Member for Billericay (Mr. McCrindle), I cannot claim an act of gallantry in Committee. Unfortunately, I was absent from the Committee for most of the debate. I returned just before the Division and felt it right to cast my vote for the Government.
Since then I have studied the debate with care and listened to the arguments with interest. But I must tell the House that I am not convinced that the right


solution has been found either in the wording of the clause as it emerged from Committee or in the form now proposed by the Government. The clause is at fault because it would reduce to too low a level the contribution of the employee and throw out of balance the relationship between the private and the reserve schemes. The Government, on the other hand, seek to achieve a wholly desirable objective by a method which I believe to be wrong on grounds of fundamental principle.
11.45 p.m.
I share the view of my right hon. Friend that the interests of the majority of pensioners are best served by encouraging the development of private schemes tailored to their individual needs, capable of improvement in a competitive atmosphere and subject to all the negotiating pressure by trade unions, which I hope and trust will increasingly develop. Just because a reserve scheme, by its very nature, will tend to provide minimum rather than maximum benefits, I want to see plenty of stimulus to the development of private schemes, and I want no excuse for short-sighted employees or idle or mean employers to take what may be at the start the easier way out in terms of both cost and administrative burdens.
It would be gravely damaging to large numbers of employees if we were to finish up with a Bill which, for reasons of short-term economy, tended to push them into the reserve scheme. My right hon. Friend and I are at one on the objectives.
I also completely accept—here I differ from some of the arguments that have been put forward this evening—that there are valid reasons for selecting the level of contributions for the reserve scheme which the Government arrived at before making an adjustment to compensate for loss of tax relief. It has been argued that they are arbitrary—I have argued it myself—but I now accept that that is wrong. A decision on the level of contributions has to be arrived at by balancing a variety of economic and social considerations—on the one hand a reasonable level of benefits, and on the other a contribution level that does not add initially an excessive burden to industrial

costs, and also the other factors referred to by my right hon. Friend.
Of course, there is nothing sacred about a 50-50 balance between employer and employee contributions—we have heard that it would be the exception rather than the rule—but there are perfectly cogent arguments for arriving at a 50-50 balance in this case. I am happy to defend the Government for doing so. What I am unable to defend is the decision to reduce the employee contribution instead of allowing tax relief.
Unfortunately, the decision is based upon what I consider a fallacy that the 50-50 balance has some relevance to the question of tax relief. The truth is that, first, the 50-50 balance has no continuing validity at all. It is the product of a number of variables. It may continue to be right, or it may not. Whether it does or not is irrelevant, because no one will subsequently say "Of course, I know that the Minister looked at the facts and arrived at that conclusion. I know that 50-50 is and must be right." No one subsequently will even consider the Minister's decision or the reasons which might have led him to take it.
What they will do instead is to compare the two things that retain a constant relationship and are therefore capable of comparison, and those are the purchasing powers of equal contributions—the one paid into a private scheme, and the other to the reserve scheme. What matters must be the purchasing power of the level of contributions, and I find it difficult to escape the conclusion that by removing the tax advantages of the one, what the Government are doing is loading one contribution against the other. Surely it cannot be relevant whether one puts up the employer contribution against the employee contribution by £40 million or any other figure. Additional compensation from an employer surely cannot be proper compensation for the failure of the State to give tax relief. The State does not meet its obligations by getting someone else to pay them.
Contributions, whether from employer or employee, form part of the remuneration package. In the one case the contribution is paid direct; in the other it is paid first into the pocket of the employee, from which it is taken to be put into the pension scheme. Both represent


pay, current or deferred, to the employee. That is accepted by the Government. Indeed, in the debate yesterday, the Under-Secretary said:
… what we say in this Bill is that we have now reached a point at which pension rights should be regarded as deferred pay to which men or women are entitled in the same way as they are entitled to their monthly salary or their weekly wages."—[OFFICIAL REPORT, 8th May, 1973; Vol. 856, c. 347.]
If that concept is correct—it is widely accepted—it cannot conceivably be right that the pay of one group of employees should qualify for tax relief while that of the other does not.
The inequity becomes worse when the group of employees that does not get the tax relief contains a high proportion who are among the lower-paid but still above the tax threshold but, because of the nature of their employment, have no option, no choice at all, but to go into the reserve scheme.
I accept that it was the Government's intention that the employees should be fully compensated for the loss of their reliefs. Parliamentary scrutiny has unmistakably revealed a central flaw in their proposals and a fundamental weakness in their method. It would be a profound mistake for the Government to damage the integrity and the future success of what is otherwise a great piece of reforming legislation.
There is no need for that. The method that the Government have chosen is not the only method. It happens to be the one they chose but it is not essential to their success. They could, for example, leave the Bill as it stands and table, here or in another place, an amendment to increase the employee's contributions to what they would otherwise have been. I considered tabling such an amendment myself, but I considered that it should come from the Government, since some other changes may be required to maintain the balance between the private sector and the reserve scheme. Failing such an amendment, there is the proposal of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) which we are discussing.
My right hon. Friend can reasonably complain to his critics on this side that these criticisms have been raised at a very late stage. I accept that I and others

should have realised earlier what is involved. But irritating though that must be, it is not a shelter behind which my right hon. Friend can hide. The parliamentary process is designed to reveal flaws in legislation, and this is too far-reaching and long-lasting a piece of legislation for the flaw to be left, once exposed.
My right hon. Friend has argued tonight that a change would cause delay, which could have uncomfortable consequences. I found that part of his speech perhaps its most persuasive section. I accept that there will have to be some delay, but this is an argument which can be overplayed. It is very hard to believe that the options were not carefully examined long ago and that, with determination, the necessary amendments cannot be produced.
My opposition tonight is not hasty or fractious. It is with regret that I have to criticise at this stage what I consider to be a profoundly important and valuable piece of legislation. My right hon. Friend knows that I have considered all his arguments. At the end of the day, it is because I believe that his amendment could cast a blight on the success of the Bill by raising a question mark over its fairness that it I find it necessary to make a stand.
Like my hon. Friend the Member for Billericay, I am involved in the pensions industry. As much as my right hon. Friend the Secretary of State, I want it to succeed in the challenge with which we are now presenting it. But I want it to do so on its own merits and not at the expense of one important group of pensioners.
The voices on the Government side of the House raised against the Government's proposals are precisely the voices most anxious for the Bill to succeed. They are precisely the voices which my right hon. Friend should wish to have in his support. Even at this late stage, I beg him to think again.

Mr. Boscawen: As one of the Members who helped to bring about this debate in Committee, I feel it right to give the reasons why I could not support the Government in Committee and why I am still so worried nearing the end of this debate.
The first reason was that I believed it to be right that the House as a whole should discuss this important matter. The second reason was that it seemed to me extremely unfair that there should be this tax differential between two classes of employees. The third reason was that it was obvious to me that the methods used by my right hon. Friend the Secretary of State to give an incentive to those firms which today have minimal occupational schemes, or no schemes, to undertake an occupational scheme as opposed to going into the reserve scheme, was likely to be widely misunderstood, to such an extent that it would militate against the whole central strategy which we and the Secretary of State support to the full. The debate emphasises that it has been widely misunderstood even in the House.
My right hon. Friend has not given sufficient attention to the alternative to giving tax relief as an incentive to encourage those particular firms to have occupational schemes. I am sorry that he dismissed out of hand the alternative put forward by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams). This at least gave an opportunity of overcoming some of the hurdles about which there is so much worry. It gave the opportunity of overcoming the hurdle that those firms which were doubtful about occupational schemes would go for the reserve scheme simply because it offered the lowest possible contributions to their employees. That hurdle would be overcome by my hon. Friend's scheme because there would be no change in the contribution by the employee to the reserve scheme.
The hurdle of the administrative difficulties for those firms which would be in the reserve scheme perhaps having to pay into the basic pension scheme at the same time would be overcome by my hon. Friend's idea of paying a lump sum tax relief—not a subsidy—to the State reserve scheme in lieu of personal tax relief to individuals in the reserve scheme. Furthermore, it would overcome the unfairness because it would bring about tax relief to those who, through no fault or choice of their own, are forced to go into the reserve scheme. It would also be of assistance to those below the tax level in the reserve scheme in that

they would partake in the benefit of that lump sum tax relief which would be going into the fund and would be working towards the improvement of their pension at the end of the road.
12 midnight.
For these reasons I very much support my hon. Friend's amendment, I am distressed that it was dismissed out of hand and that it might be thought by employers that the State was subsidising the State reserve scheme against their interests. But a tax relief is not a subsidy, and I am sure that the Conservative Party has always taken that view in these matters. Tax relief to the State reserve scheme in lump sum form would be no different from the tax relief given individually to those in occupational schemes.
I ask my right hon. Friend the Secretary of State to reconsider his dismissal of my hon. Friend's proposals out of hand, because I believe that there is an alternative to the present situation. I therefore support what my hon. Friend the Member for Hampstead (Mr. Geoffrey Fins-berg) said, and I hope that my right hon. Friend the Secretary of State will take the Bill back and have a look at it to see whether he can produce an alternative form when it comes before another place.

Mr. Marcus Worsley: My remarks will be short because I do not claim great expertise in this subject. Obviously, like everyone interested in the social services I have been listening intently to the arguments in the discussion. One thing which strikes me clearly is that it involves a value judgment between those who take one view and those who take the other. No one knows what will happen, and the real question is whether the balance is right, whether the Bill should be in its present form or in its pre-Committee form.
Having listened to this a great deal and having taken the whole argument together, I conclude that it is not only a matter of tax relief or no tax relief, it is not only a matter of the split in the contribution; it is all sorts of other things like transferability that arise as a result of the tax relief scheme. The decision is for the employer. I employ a small number of people, and I understand how easy it is for the employer to take the easy course and slide into the reserve scheme. My employees have not had the benefit of an occupational scheme.
It is important that the balance should be got right. If the House goes to the extreme position, and it is an extreme position, of accepting what the Bill said when it came back from Committee it will tilt the balance in favour of the reserve scheme. I ask my hon. Friends to consider carefully what they are doing in that respect. If the reserve scheme takes a markedly larger share of the market than is intended by the Government the consequences and the dangers for the whole philosophy upon which our party is based will be incalculable. The result could be that there would be a gigantic fund which would be subject to political pressures. However attempts were made to buttress the scheme through trustees and the rest, political pressures would be applied.
My hon. Friends should consider what it would mean to tilt the whole balance of the argument in favour of the reserve scheme. They should envisage the situation if the reserve scheme begins to eat up a large share of the market and the effect this would have if we were unlucky enough to have another Labour Government. That must be considered.
I say this with no great happiness. In a sense I share a great deal of the unease of my hon. Friends. I do not believe that to shift the balance as the Committee shifted it makes sense. The right thing to do is to give the Government their way in the matter, and at the same time ask them to look at it again in the light of the debate, to see whether they have got it quite right.
I beg the House, and particularly my hon. Friends, not so to alter the balance between the occupational schemes and the reserve scheme as to give the latter an advantage that I believe my hon. Friends do not really wish.

Sir B. Rhys Williams: The House is anxious to divide, so I shall be very brief. There are many points that I should like to make, but they have already been made so much better than I could make them by my hon. Friends, whose courage and outspokenness I admire. I also admire my right hon. Friend's heroism in pressing on with the Government amendment in spite of the objections of the Press, the obvious reserve of the professional organisations

concerned, and the consciences of his colleagues on his own side—for the most part—who have given the matter the most study.
Obviously, what my right hon. Friend is doing will be unpopular. An estimated 7 million people will receive lower pensions, for the same net contributions, than luckier earners whose employers have decided to run private schemes. I understand that for a man who spends all his working career in the reserve scheme on £20 a week over £1 a week will be lost in terms of pension, at today's money values; and for a man earning more, the loss of pension will be greater still.

Sir K. Joseph: I should like to contradict that forcibly. That is not a figure that I could possibly corroborate.

Sir B. Rhys Williams: I am surprised at my right hon. Friend. I think he will agree that if 15 per cent. is deducted from the tables published by his own Department in the Explanatory Memorandum he will find that my arithmetic is not too far out.
Because I admire him so much, I regret very much what my right hon. Friend has said tonight. It seems to me that his speech will be criticised by experts, and will be seen as entirely out of character. My right hon. Friend is acting out of character in pressing an amendment that will reduce the incomes of the poor in pursuit of a concealed subsidy for free enterprise.
But a man who never made a mistake never made anything, and even now I implore my right hon. Friend to realise that he has made a mistake and that he should withdraw his Amendment No. 85.
As far as the attitude of the professional bodies is concerned, Mr. Michael Pilch, who was acting until recently as the official negotiator on behalf of the National Association of Pension Funds, wrote on 17th April in the Financial Times that:
The logic and justice of allowing tax relief on employee contributions to the State reserve scheme has never been in question.
My right hon. Friend should pay attention to comments of that kind in the national Press.
I know that my right hon. Friend is thinking about the cost-conscious employers—what I suppose will now be


called the £5-employers—but how would it benefit the employees to belong to rock-bottom occupational schemes? I do not think that it has been denied that offers are being made of 3½ per cent. schemes. Of course, my right hon. Friend is right in saying that if interest rates significantly decline those offers will disappear, and employers will find that their contributions go up. But at that point they will simply wind up their schemes, if they are really cost-conscious, and tip their employees into the reserve scheme. So my right hon. Friend's plan will have achieved nothing.
My right hon. Friend is merely catering for employers who want to do the minimum for their employees. He made the point that private schemes are not compulsory but, of course, private schemes have been compulsory since the Boyd-Carpenter Act. It has been necessary for employers to have occupational schemes of a kind, either the official scheme or private schemes, since that time. The same will apply under the Bill. If an employer does not join the reserve scheme he will have to set up a private scheme. Thus a private scheme will become statutory. That is the whole point of the Bill.
Therefore, there is no distinction between the reserve scheme and the private occupational schemes. In fact, the reserve scheme has been constituted on lines which are precisely the same as private schemes. There will be no Government subsidies. The funds will be invested through the market in conventional assets, no doubt, which will be managed in the same way as a private scheme. There is no logic or justice in discriminating against the reserve scheme through the tax system.
The analogy of subsidies for home owners does not stand up because reserve scheme members will probably have had no choice. Nor, in many cases, will their employers. It is not a question of guiding people in the direction which the Government think right. Many millions of people will have to be in the reserve scheme because there is no other.
The suggestion that the money is coming from the employers falls down because in private schemes with the same contributions there is no suggestion of loss of tax relief. There are other points

which I could make in that regard, but I shall consider only the effect on the total remuneration package. If £25 million a year is removed from the reserve scheme, it will be the beneficiaries who suffer.
I do not think that what my right hon. Friend is doing is wise. It will leave clouds of battle and all the old uncertainties over the future of my right hon. Friend's Bill. It is not necessary, because there are other ways in which he could achieve the same object which would not cause offence to right hon. and hon. Members on both sides of the House, and it cannot be right to perpetuate the "two nations" in retirement and to introduce one law for the poor and one law for the rich.
Nor will what my right hon. Friend is doing fit the strategy of the Bill. He wants to increase the flow of savings and to increase ultimate pensions. But to take £25 million out of the reserve scheme will reduce the flow of money to the capital market. What he is doing will in the end result in lower pensions.
This is a deplorable strategem, and the House should reject it. I shall vote against the Government on Amendment No. 85. I think it will be good for the Department if the Government are defeated on this matter. They should never have advised Ministers to go forward into a moral defeat. I am sure that a Government defeat will be good for the Conservative Party, because by defeating the Government over this amendment we shall ensure that the Bill does not contain a genuinely objectionable feature. We want the Bill to be a milestone, not a millstone. It will also be good for the reputation of this House, if we show that we are not prepared to allow the tax system to be used in a way that will damage the interests of the poor.

Sir K. Joseph: I shall ask my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), with a number of whose remarks I do not agree, to pick up his Notice Paper and consider whether he will co-operate with the Government to the extent of withdrawing Amendment No. 180 to give the House the opportunity to have a straight vote on the issue raised by Amendment No. 85. I ask him to do so because Amendment No. 180 is just not liveable-with. The


Government could not live with it because of its implications for the recognition tests. We have not the chance in another place to interfere with anything to do with taxation. This is the last opportunity which we shall have to touch it.
If my hon. Friend will be content to have a decision taken by the House on the main issue, which is whether to leave in the subsection which was put in in Committee, I shall address myself to that issue only whilst reserving the right to make a few last comments. Will my hon. Friend agree to that?

Sir B. Rhys Williams: Amendment No. 180 and new Clause 10 were intended as olive branches, but Amendment No. 85 is the point at issue. I entirely agree with my right hon. Friend.

12.15 a.m.

Sir K. Joseph: I am grateful to my hon. Friend. I think that at the appropriate time he will be willing to withdraw Amendment No. 180 so that we can have a vote on Amendment No. 85. That saves me from the need to argue with my hon. Friend, for whom I have the greatest respect, about the implications of Amendment No. 180.
I would very much like on behalf of the Government to accept the constructive approach offered by my right hon. Friend the Father of the House. He said that, since what lies behind the main issue is a tax matter, it would be sensible for the Government to take that tax matter away and consider it between now and the next Finance Bill. But he knows that I cannot make an undertaking at short notice on behalf of my right hon. Friend the Chancellor of the Exchequer and that I have no reason to believe that he would be willing to consider such an undertaking. Therefore, delighted though I would be to carry my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton) with me. I cannot take advantage of his constructive offer. Although I shall certainly consider it, I cannot offer any undertaking based on it.
There is a clear issue before the House. Are my hon. Friends the Members for

Billericay (Mr. McCrindle) and Pembroke (Mr. Nicholas Edwards) correct in sweeping aside the deliberate effort made by the Government to recompense the employee in the reserve scheme by a higher contribution than would otherwise have been paid by the employer? Despite all the temptations, which my hon. Friend the Member for Kingston-upon-Thames (Mr. Norman Lamont), in a very excellent speech, emphasised, to go for the soft option of the reserve scheme, despite the power of inertia, despite the fact that many employers have not now got occupational pension schemes, nevertheless the reserve scheme can still remain about 7 million people strong at any one time and recognised occupational schemes flourish.
The fact that my hon. Friends in particular have to face is much more sobering. It is that the experience brought to me in the form of advice, not just from civil servants—valuable though their advice is—but from the total range of employers is that if, with the best of motives, they vote into the Bill tax exemption on the reserve scheme the result will be twofold.
First, the reserve scheme will be flooded with several million people who could be, are suitable to be and should be in recognised occupational pension schemes. Secondly, by so doing my hon. Friends will be contradicting their objective, which is the objective of the Government, and will not be achieving one penny improvement in the pension of those in the reserve scheme.
The debate has been long and serious, and I am content to put the issue to the vote. I ask hon. Members to do what my hon. Friend the Member for Chelsea (Mr. Worsley) rightly advised—take the whole argument together and consider in the light of our philosophy and on behalf of the welfare in retirement of several millions of wage earners where their vote should be placed.

Sir B. Rhys Williams: I beg to ask leave to withdraw Amendment No. 180.

Amendment, by leave, withdrawn.

Amendment proposed: No. 85, in page 97 line 13, leave out subsection (7)—[Sir K. Joseph.]

Question put, That the Amendment be made:—

The House divided:Ayes 130, Noes 126.

Division No. 132.]
AYES
[12.19 a.m.


Adley, Robert
Grieve, Percy
Neave, Airey


Allason, James (Hemel Hempstead)
Gummer, J. Selwyn
Nott, John


Archer, Jeffrey (Louth)
Gurden, Harold
Osborn, John


Atkins, Humphrey
Hall, John (Wycombe)
Page, Rt. Hn. Graham (Crosby)


Baker, Kenneth (St. Marylebone)
Harnnam, John (Exeter)
Percival, Ian


Bell, Ronald
Harrison, Col, Sir Harwood (Eye)
Price, David (Eastleigh)


Benyon, W.
Haselhurst, Alan
Pym, Rt. Hn. Francis


Biggs-Davison, John
Hastings, Stephen
Redmond. Robert


Boardman, Tom (Leicester, S.W.)
Hawkins, Paul
Rees, Peter (Dover)


Body, Richard
Hayhoe, Barney
Ridley, Hn. Nicholas


Bowden, Andrew
Holland, Philip
Ridsdale, Julian


Brocklebank-Fowler, Christopher
Hordern, Peter
Roberts, Wyn (Conway)


Brown, Sir Edward (Bath)
Hornsby-Smith,Rt.Hn.Dame Patricia 
 Rossi, Hugh (Hornsey)


Bryan, Sir Paul
Howe, Rt. Hn. Sir Geoffrey
Scott, Nicholas


Butler, Adam (Bosworth)
Howell David (Guildford)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Chapman, Sydney
Howell Ralph (Norfolk N.)
Shelton, William (Clapham)


Chichester-Clark, R.
Hunt, John
Shersby, Michael


Churchill, W. S.
James, David
Skeet, T. H. H.


Clark, William (Surrey, E.)
Jenkin, Petrick
Soref, Harold


Cockeram, Eric
Johnson Smith, G. (E. Grinstead)
Speed, Keith


Cooke, Robert
Jopling, Michael
Spence, John


Coombs, Derek
Joseph, Rt. Hn. Sir Keith
Sutcliffe, John


Corfield, Rt. Hn. Sir Frederick
Kellett-Bowman, Mrs. Elaine
Taylor, Edward M.(G'gow,Cathcart)


Cormack, Patrick
King, Evelyn (Dorset, S.)
Taylor, Frank (Moss Side)


Crowder, F P.
Knox, David
Tebbit, Norman


Dean, Paul
Lament, Norman
Temple, John M.


Dixon, Piers
Lane, David
Thomas, John Stradling (Monmouth)


Drayson, G. B.
Langford-Hold, Sir john
Trew, Peter


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Le Marchant, Spencer
Tugendhat, Christopher


Eyre, Reginald




Farr, John
Lewis, Kenneth (Rutland)
van Straubenzee, W. R.


Fell, Anthony
MacArthur, Ian
Vaughan, Dr. Gerard



McLaren, Martin
Waddington, David


Fenner, Mrs. peggy
Maclean, Sir Fitzroy
Walder, David (Ciitheroe)


Fidler, Michael
McNair-Wilson, Michael
Ward, Dame Irene


Fortescue, Tim
Mather, Carol
Warren, Kenneth


Fowler, Norman
Maude, Angus
Wells, John (Maldstone)


Fox, Marcus
Maxwell-Hyslop, R. J.
White, Roger (Gravesend)


Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)
Meyer, Sir Anthony
Winterton, Nicholas


Gardner, Edward
Mills, Stratton (Belfast, N.)
Wolrige-Gordon, Patrick


Gibson-Watt, David
Miscampbell, Norman
Woodhouse, Hn. Christopher


Gilmour, Sir John (File, E.)
Mitchell, David (Basingstoke)
Worsley, Marcus


Goodhew, Victor
Molyneaux. James



Grant, Anthony (Harrow, C.)
Morrison, Charles
TELLERS FOR THE AYES:


Gray, Hamish
Murton, Oscar
Mr. Bernard Weatherill and


Green, Alan

Mr. Kenneth Clarke.




NOES


Ashton, Joe
Doig, Peter
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)


Atkinson, Norman
Dormand, J. D.
Jones, T. Alec (Rhondda, W.)


Barnes, Michael
Douglas-Mann, Bruce
Kaufman, Gerald


Barnett, Guy (Greenwich)
Duffy, A. E. P.
Kelley, Richard


Barnett, Joel (Heywood and Royton)
Edwards, Nicholas (Pembroke)
Kinsey, J. R.


Bennett, James(Glasgow, Bridgeton)
Ewing, Harry
Lamborn, Harry


Bishop, E. S.
Fernyhough, Rt. Hn. E.
Lamond, James


Booth, Albert
Finsberg, Geoffrey (Hampstead)
Latham, Arthur


Boyden, James (Bishop Auckland)
Fitch, Alan (Wigan)
Lawson, George


Bradley, Tom
Fletcher, Tad (Darlington)
McCrindle, R. A.


Carter, Ray (Birmingh'm, Northfield)
Foot, Michael
McGuire, Michael


Castle, Rt. Hn. Barbara
Ford, Ben
Mackenzie Gregor


Clark, David (Coine Valley)
Fraser, John (Norwood)
Mackie, John


Coleman, Donald
Gilbert, Dr. John
Mackintosh, John P.


Concannon, J. D.




Conlan, Bernard
Ginsburg, David (Dewsbury)
Maclennan, Robert



Grant, John D. (Islington
McNamara, J. Kevin


Cox, Thomas (Wandsworth, C.)
Hamilton, James (Bothwell)
Marks, Kenneth


Crosland, Rt. Hn. Anthony
Hamling, William
Marquand, David


Cunningham, G. (Islington, S.W.)
Hardy, Peter
Meacher, Michael


Cunningham, Dr. J. A. (Whitehaven)
Harrison, Walter
Mellish, Rt. Hn Robert


Dalyell Tam
Harrison, Walter (Wakefield)
Mendelson, John


Davidson, Arthur
Hard, Rt. Judith
Mikardo, Ian


Davies, Denzil (Lianelly)
Hughes, Mark (Durham)
Millan, Bruce


Davies, G. Elfed (Rhondda, E.)
Janner, Greville
Mitchell, R. C. (S'hampton, lichen)


Davies, Ifor (Gower)
Jenkins, Hugh (Putney)
Morris, Charles R. (Openshaw)


Davis, Clinton (Hackney, C.)
Jenkins, Rt. Hn. Roy (Stechford)
Moyle, Roland


Davis, Terry (Bromsgrove)
John, Brynmor
O'Malley, Brian


de Freitas, Rt. Hn. Sir Geoffrey
Johnson, Walter (Derby, S.)
Oram, Bert


Dell, Rt. Hn. Edmund
Jones, Den (Burnley)
Orme, Stanley




Owen, Dr. David (Plymouth, Sutton)
Sandelson, Neville
Varley, Eric G.


Palmer, Arthur
Sheldon, Robert (Ashton-under-Lyne)
Wainwright, Edwin


Pardoe, John
Silkin, Rt. Hn. John (Deptford)
Walker, Harold (Doncaster)


Parker, John (Dagenham)
Silkin, Hn. S. C. (Dulwich)
Wallace, George


Pendry, Tom
Skinner, Dennis
Wells, William (Walsall, N.)


Perry, Ernest G.
Stallard, A. W.
Whitehead, Phillip


Price, William (Rugby)
Steel, David
Whitlock, William


Radice, Giles
Stewart-Smith, Geoffrey (Belper)
Williams, Alan (Swansea, W.)


Reed, D. (Sedgefield)
Strang, Gavin
Williams, Mrs Shirley (Hitchin)


Rhys Williams, Sir Brandon
Stuttaford, Dr. Tom
Wilson, Rt. Hn. Harold (Huyton)


Roberts,Rt.Hn.Goronwy(Caernarvon)
Summerskill, Hn. Dr. Shirley



Roderick, Caerwyn E.(Brc'n&amp;R'dnor)
Swain, Thomas
TELLERS FOR THE NOES.


Ross, Rt. Hn. William (Kilmarnock)
Thomas, Jeffrey (Abertillery)
Mr. Ernest Armstrong and


Rowlands, Ted
Turton, Rt. Hn. Sir Robin
Mr. James A. Dunn.

Question accordingly agreed to.

Mr. O'Malley: On a point of order, Mr. Deputy Speaker. In view of the fact that, despite the whipping efforts of the Conservative Party, this House has demonstrated its views very clearly, and seeing that the Government have suffered a moral defeat, may I ask whether—

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. This is not a point of order for me to answer.

12.30 a.m.

Mr. Harold Wilson: I do not see my opposite number here. Surely it is in accordance with precedent, of which many could be quoted, that this question can be put and that the Government should be asked to state their intentions in this matter.

Mr. Deputy Speaker: It is hardly a point of order for me. I am sure the right hon. Gentleman will agree with that.

Sir K. Joseph: The right hon. Gentleman has asked what are the Government's intentions. There has been a three-hour debate. All those who wanted to take part have had the chance to do so. The Government's views were put, the views of those who disagreed with the Government were put, and the House has come to a decision. The Government will carry on with the legislation, of course.

Mr. Gerald Kaufman: On a point of order, Mr. Deputy Speaker. This is a matter for you and is a genuine point of order. Since the House has been debating a matter of intense importance to all those interested in democratic rights, could the Serjeant at Arms be asked to make a search for the hon. and learned Member for Lincoln (Mr. Taverne)?

Mr. Deputy Speaker: I have no power to ask the Serjeant at Arms to search for any hon. Member. If hon. Members wish to vote, they vote. If they do not wish to vote, they do not vote. Neither the Serjeant at Arms nor I has any jurisdiction in those matters.

Clause 74

RESERVE SCHEME PREMIUM ON TERMINATION OF RECOGNISED PENSIONABLE EMPLOYMENT.

Amendment made: No. 86, in page 97, line 28, after 'State', insert:
'or in Northern Ireland, to the Northern Ireland Ministry '.—[Mr. Dean.]

Mr. Dell: I beg to move Amendment No. 87, in page 98, line 13, at end insert:
'and
(c) if the Reserve Scheme Premium is payable in respect of a period of two years or more, it must be supplemented by an amount specified by the Reserve Pension Board as adequate to compensate both for the pension which would have been payable under Schedule 18 and the bonuses which would have been earned had the relevant employment not been recognised'.
The Government have just blackmailed their back benchers into the Lobby in support of an amendment which cannot be in accordance with their judgment or their conscience. The Government have done this because of a fear that additional millions of people will go into the reserve pension scheme, a miserable fall back scheme which the Government have done everything to denigrate. Apparently merely giving tax rebates on the reserve pension scheme would lead the employers of 7 million persons to opt for it or to exercise their pressure in that way.
Throughout the debates in Committee and on Report I have urged the principle that people should not do worse in occupational schemes than they would do in the reserve scheme. The Secretary of


State said that if the tax rebate was granted it would deprive millions of people of the benefit of being in occupational pension schemes, schemes so poor that the reserve pension scheme will often be better.
This amendment embodies the same sort of principle in a slightly different form. It is that people who are paid back into the reserve scheme should not do worse, through having been forced to be in an occupational scheme, than they would if they had been in the reserve scheme. That they will do worse is evident from the answers given to me in reply to Parliamentary Questions. I have quoted one such answer given in Committee. One of the oddities of the Bill is that if a person is paid back into the reserve scheme because he had not been in an occupational pension scheme long enough to have his pension preserved he will lose from being so paid back even though the reserve pension scheme is already so poor. A person in this position loses pension and bonuses for the period for which he has paid back. He can be significantly worse off, especially if it happens to him several times.
In Committee I proposed various ways to deal with this problem. I suggested an option so that people who saw that probably they would be frequently moving from job to job should be able to decide whether they should be in the reserve pension scheme or in the employer's occupational pension scheme. I was told that that was not satisfactory to the Government. I suggested an option which would have assisted this narrow point. I suggested that when employees or ex-employees were paid back into the reserve scheme, provision should be made out of the funds available to employers to bring the benefits which the employees would earn up to the level which would have been earned in the reserve pension scheme. The Under-Secretary said that that was too difficult and that too many people moved too rapidly within two years. He said that about three-quarters of the movement of people occurred within two years of their beginning their employment.
I have accepted that argument, saying "Let us do it at least for people who have been in that employment for more

than two years. When they are paid into the reserve pension scheme, let them have the benefit of such additional employer's contribution to the reserve scheme as will raise their entitlement to what they would have earned had they been in the reserve scheme all the time". The Under-Secretary agreed to consider this point when it was put to him in Committee. Nothing has happened. We have not heard any response from him about the result of his consideration.
I move the amendment both for its own merits and to give the Undersecretary an opportunity to tell us whether he again proposes to insist on people doing even worse than they would have needed to do had they been in the reserve scheme all the time.

Mr. Dean: As the right hon. Member for Birkenhead (Mr. Dell) said, this matter was discussed in Committee and I agreed to consider the point which he had put. I do not agree with his disparaging remarks, made today and on many other occasions, about the reserve scheme. It is a modest scheme, and has always been designed as a modest scheme, to meet the needs of the small employer and of the employee who will be contributing in many cases to an occupational scheme for the first time. Therefore, we must have regard to the sort of contribution which these people can be reasonably expected to afford over and above the contribution they will make to the basic scheme.
Although in the situation to which the amendment is addressed a reserve scheme premium will buy slightly less pension than would contributions paid instead, the difference in the two amounts will vary according to individual circumstances—the length of the period covered, how that period falls in relation to tax years, and the person's age. Concerning pension rights, to make good the pension amounts, including bonuses, which would otherwise be lost to the pensioner, it would be necessary to allocate to each year the parts of the premium representing contribution which would have been due in that year and to treat them as though paid in the year concerned.
There would, however, be no reliable basis for arriving at the amount which should be charged as an addition to the premium to justify that treatment.


Strictly, the surcharge should represent the difference between the yield of the reserve scheme premium and what the yield on the contribution would have been, which would depend a great deal on the interest rates ruling at the time. In any event, it must be remembered that the last year covered by a premium payment is at no disadvantage as that year's payment is no more in arrears than contributions for that year would be. Therefore, a maximum period of live years is, from the point of view of the pension loss, effectively four years. Similarly, the two years which the amendment proposes to ignore is effectively one year. Difficulty would arise also because, although the premium is chargeable to the employer, the employer is empowered under Clause 75 to recover from moneys due to the employee the employee's share of premium payment, but the employee would not think it reasonable that he should have to bear the extra cost compared with what he would have had to pay if he had been in the reserve scheme all along.
Perhaps the real nub of the argument is whether the extent of the loss of pension is sufficiently great to warrant introducing the considerable complications of a surcharge. I have mentioned the very considerable complications which would be involved. As I explained in Committee, the largest amount of movement between jobs takes place in the earlier years of employment and at the youngest ages. These are factors we had very much in mind in settling on the period of five years as the maximum length of time to be covered by the reserve scheme premium. It is a matter of judgment what period should be allowed to go by before loss of pension by reason of retrospection becomes too great to be acceptable. The amendment would go as far as two years. In our view, five years is not unduly long.
No one is likely to gain, in the interests or precision, by any device of rules so elaborate that they cannot be complied with except at the cost of quite disproportionate effort and expense. I therefore put it to the right hon. Gentleman that, were we to adopt his amendment, there would be real danger of our getting into that position, and that, therefore, the objective he outlined in his amendment would be defeated.

Mr. Dell: The hon. Gentleman accused me of making disparaging remarks about the reserve pension scheme. All I have said in Committee and in the House again and again is that, bad as the reserve pension scheme is, it is often better than occupational schemes at minimal levels. Indeed, that is what the Government are scared about. That was what the last debate was about. The Government are scared that the reserve scheme will be too attractive to many people. If the tax rebate scheme were to have taken effect it would have been slightly more attractive. I can tell the Government that, in my judgment, their strategy will fail anyhow, tax or no tax. Their strategy was wrongly conceived, and the effect of the reserve pension scheme, poor as it is, will be very much larger than they suspect. All I am saying is that the reserve pension scheme, pathetically low though it is, is sometimes better than the minimum benefits of other schemes. People, therefore, will wish to be members of the reserve pension scheme. It has been hon. Members on the Government's side who have poured scorn on it. I referred yesterday to the hon. Member for Melton (Miss Pike)—I think it was—who talked about people being relegated to it. That is the attitude to it of the Government's supporters.
However, the Minister is not prepared to do justice even by the pathetically low levels of benefit which he provides through this Bill. I cannot now do anything to change his mind. I suppose. I merely note that the Government are introducing a pathetically bad second pension system, and are resisting every attempt by hon. Members of the Labour Party to improve it.

Amendment negatived.

12.45 a.m.

Mr. Dean: I beg to move Amendment No. 88, in page 98, line 26, after 'Act'. insert
'with full entitlement also in respect of any recognition credits allowed him under the rules of that scheme'.
It might be for the convenience of the House if I were to explain Amendment No. 89 as well.
These are technical amendments which are designed to bring the provisions fully


into line with the requirements of the Bill, as amended in Committee, in relation to recognition credits.

Amendment agreed to.

Amendment made: No. 89, in page 98, line 27, leave out from 'scheme' to second 'with' in line 30 and insert:
'includes such provision as is required for recognition purposes by section 56(3) of this Act and a transfer of the earner's accrued rights has been, or is to be, made in accordance with that provision.'—[Mr. Dean.]

Clause 75

DEDUCTION OF PREMIUM FROM REFUND OF CONTRIBUTIONS

Mr. Dean: I beg to move Amendment No. 90, in page 101, line 29, after second 'to' insert:
' or for the benefit of, or in respect of,'.

This is a technical amendment.

Amendment agreed to.

Clause 76

RESERVE SCHEME PERSONAL PENSION

Mr. Dean: I beg to move Amendment No. 91, in page 102, line 6, at end insert: —
' (3) Subject to and in accordance with regulations, a person with entitlement or prospective entitlement to a reserve scheme pension may, at any time before the pension comes into payment, elect for payment of the pension to be postponed for any period (whether determinate or not), but not beyond the age of 70 in the case of a man, or 65 in the case of a woman; and where a person so elects, the rate of pension shall be subject to adjustment in the prescribed manner, so as to take into account any period between pensionable age and the time when the pension comes into payment'.

Mr. Deputy Speaker: With this amendment it will be convenient to take the following Amendments: No. 157, in page 102, line 6, at end add:—
'(3) The Secretary of State shall make regulations prescribing the rates at which reserved scheme pensions shall accrue when the earner chooses to continue working beyond pensionable age',
and Government Amendments Nos. 92, 94 and 95.

Mr. Dean: This point has been discussed on earlier amendments. The amendment introduces the concept of flexibility for those who postpone their

retirement. This is of particular interest to women with regard to the reserve pension scheme.
Having undertaken in Committee to consider further the possibilities of introducing an arrangement to enable payment of pension to be deferred and for the rate to be enhanced when the pension is put into payment later, we now put forward these amendments which I know will commend themselves to both sides of the House.
These amendments introduce, as it were, the bone structure of the arrangements and leave consequential detail to be filled in by regulations. The main point is that, under the arrangements proposed, everyone will have a choice to defer taking their pension at pensionable age, if they so wish. It will not be necessary to specify in advance the period of deferment. While no doubt in most cases the preference is likely in practice to be that the pension should come into payment at the time of retirement from work, we do not want to link payment with actual retirement as a statutory requirement. There are advantages in maximum flexibility, and we think that the choice should be left open. The only point is that the maximum period of deferment should, in our view, be to age 70 for a man and to 65 for a woman. These are the ages at which there is entitlement to the basic scheme pension as a matter of course without condition as to retirement, and this would allow a period of enhancement of up to five years at most which corresponds with practice in occupational pension schemes.
Our aim is that the eventual rate of pension should represent an actuarial adjustment to reflect the period of deferment. How this should be done, by what size of steps the enhancement of pension should proceed, and how parts of a year should be taken into calculation will be matters for regulations. These are details which I do not imagine the House would wish me to go into now.
For the rest, the terms of Clause 77, which deals with the reserve scheme widow's pension, are drawn on the basis of a pension which is not deferred and so relate to normal pensionable age. It will be necessary for some modification to be made to fit the circumstances where an election has been made to defer payment


of personal pension, and for this purpose regulations will be necessary.
Similarly, it will be necessary to make arrangements for fitting these deferred pensions into the bonus structure, with which Clause 78 is concerned. This, too, is a matter for regulations, and Amendments Nos. 94 and 95 make the necessary provision.
The whole package of amendments adds some complexity to the reserve pension scheme, but in our view, and clearly in the view of the House, the advantages gained are worth it. We have, in particular, been impressed by the arguments that have been advanced to the effect that a facility of this kind will be especially welcome to women, most of whom, it is said, will benefit from being able to continue at work beyond the minimum pensionable age of 60 and to retire later on a larger pension. This opportunity they will now have in the reserve pension scheme.

Mr. George Cunningham: Why was the opportunity not taken to provide for a person to retire at a lower age than that which is normal? I do not mean below the age of 60, but below the age of 65 for men? There will be no more actuarial difficulty about making that computation than there is about the actuarial problem of finding the right factors for deferring a pension.
Secondly—and I think that I read the amendment correctly—what is said is that the person may defer the pension. It does not say, at least in terms, to take the example of the woman who would have retired at the age of 60 but decides to defer to the age of 65, that she will have to pay the contribution between the ages of 60 and 65. I thought from what the Minister said in his presentation of the amendment that it was almost implicit that she might not in some circumstances. There will be different actuarial factors resulting if she is paying a contribution, and if she is not. Are there to be that number of variations in the options open? It would be a good thing if that were so, but it would complicate the business.
Thirdly, I want the Minister to confirm, if he will, something that was said yesterday. We were told that the inten-

tion is that even when, by this device, differences in retirement ages are removed, men's contributions will bear the burden of widows' pensions, and women's contributions will bear the burden of the longer life of women. I should have thought that as the Government are taking the opportunity to remove differences in retirement age from the calculation, and as the other two factors, first, operate in different directions and, secondly, almost balance each other, it would be better to get rid of the sex consideration entirely.
As I read the amendment, there is nothing in the wording to prevent that from being done. The regulations made under the terms of the amendment could provide that in these cases men and women will be treated indiscriminately as human beings, and in that way we could get nearer to the position which, in the discussion yesterday, it was generally agreed would come, and come fairly soon.
I wonder whether the Minister is prepared to say that he will be inclined to use the power that he is being given to treat men and women on an equal basis, and not on an approximately equal basis.

Mr. Dell: My hon. Friend the Member for Islington, South-West (Mr. George Cunningham) asked the Minister why the Government had not introduced an amendment to enable men to retire earlier than they do now, down to the age of 60. My hon. Friend will remember that yesterday we debated a new clause and an amendment which would have enabled that to happen, but the Government rejected it because I had not also put down all the necessary consequential amendments.
I agree that this is a relevant question. The Government apparently will face the absurdity of making up about a dozen different tables for different ages of retirement for men and women when, by adopting the principle that the tables are going to be so close that they might as well be the same, they could easily have got themselves into the position of having tables based on age of contribution and age of retirement, which is the simple thing to do, and the thing which I imagine we shall get to soon enough anyhow.
I have only one worry about the amendment, and it arises out of something that the right hon. Gentleman said yesterday. When I asked him what was intended by Amendment No. 91, he said:
I did not say that as between 60 and 65 there will be any close approximation between a man's and a woman's accrual rate."— [OFFICIAL REPORT, 8th May, 1973: Vol. S56, c. 266.]
I take it that that in no way detracts from the principle which the Government now accept, that where a man and woman both retire at 65 the rate of accrual for each year's contribution will be much the same. I do not think that the hon. Gentleman intended to say that, and this sentence does not necessarily mean that, but I should like once more on the record a clear statement of the fact that we are dealing with tables which imply that men and women will be treated virtually the same in this respect.
Now that they have introduced the amendment, the Government may have to confront another point which I raised yesterday—the implications for the basic pension. They will give considerable pension advantages here to people who defer their retirement but substantially lower rises in basic pension, proportionately, for other people who defer their retirement. People will not readily understand the difference, and that may be a problem which the Government will have to face at another time.

Mrs. Castle: I, too, would like to get one thing clear. I thought that the only thing preventing complete equity in accrual rates for men and women was the fact that women retired earlier. I thought that the House had accepted the validity of the argument that we should not take into account the fact that women live longer than men. If we are to take that fact into account, we had better start taking it into account in respect of other categories of worker who can be classified as living longer than other workers —for example, non-manual as against manual workers.
So I do not understand the obscurity as to the exact accrual rate which will be obtained at any particular age of retirement. Can we be categorically assured that it will be the same accrual rate for men and women if they have entered the scheme at the same age?

If we cannot have that assurance, the Government are merely highlighting an unfair discrimination on the grounds of sex.

Mr. Dean: The hon. Member for Islington, South-West (Mr. George Cunningham) asked me: why not allow retirement at an earlier age? We had discussions about this in Committee in regard to both the basic pension and the second pension, and the argument is still the same—namely, that to allow people to retire and to draw their pension at below retirement age would mean that a number of people may well not resist the temptation to retire earlier on an inadequate level of pension and may, therefore, be more inclined to become dependent on supplementary benefit later. I think that from his study of pension schemes the hon. Member will know the unhappy experience of other countries which have tried this.
The hon. Member also asked me, with regard to the deferred pension, to confirm that the person concerned would not have to pay contributions over the normal retirement age for an enhanced pension.

Mr. George Cunningham: Does the Minister mean, then, that, in the case of a person deferring the pension because he or she was going on working, it will not be open to that person to go on contributing into the scheme, nor will any contribution for that person go in from the employer?

Mr. Dean: Where the person goes on working the contributions will continue to be paid, yes.
The right hon. Member for Birkenhead (Mr. Dell) and the right hon. Member for Blackburn (Mrs. Castle) asked about the tables. This question was answered by my right hon. Friend the Secretary of State yesterday. If one takes the case of a woman who defers her retirement until the age of 65, this will mean that the pension to which she will be entitled will be virtually the same for the same level of contributions as in the case of a man who retires at the age of 65.

1.0 a.m.

Mrs. Castle: It is that word "virtually" which puzzles me. What is


the virtue in having any difference? Why can they not be identical?

Mr. Dean: As the right hon. Lady knows very well, the main difference is the earlier retirement age. That is why there is the difference in the accrual rate. There are a few other factors which may make a marginal difference; not in all cases but in some cases. That is why 1 used the words "virtually the same".

Mrs. Castle: May we have an explanation of these other factors which make the difference? The House ought to approve those factors. If one of them is that women live longer, we ought to proceed against every section of workers that lives longer.

Mr. Dean: That is one of the factors. The other factor is that the man's contribution provides cover for the widow, whereas the woman's contribution does not.

Mr. George Cunningham: Does the Minister agree——

Mr. Deputy Speaker: I take it that the hon. Member is not about to make another speech. Perhaps he will address a brief question to the Minister, but nothing more than that.

Mr. Cunningham: I shall merely interject a question, Mr. Deputy Speaker.
The two factors of the longer life of women and the widow's pension contribution for men more or less balance. If one puts the two sexes on an equal basis, such difference as there was between them is halved because roughly the same number of men as of women are expected to be in the reserve scheme. Instead of a 5 per cent. difference between the two scales there would then be left only a 2½ per cent. difference. I am not asking the Minister to confirm precisely these calculations, but the answer is of that order. Are we to go through the nonsense of having different treatment for each sex for the sake of the man having a 2\ per cent. greater provision than women for the same contribution? Will the Minister look at this matter again. He has the powers——

Mr. Deputy Speaker: Order. The Minister can answer the hon. Gentleman now.

Mr. Dean: I mentioned the answer in introducing the amendment. Regulations will be required for the details on this point. I gladly tell the hon. Gentleman that I shall certainly consider the points that he has made before those regulations are laid.

Amendment agreed to.

Mr. Dell: I beg to move Amendment No. 185, in page 102, line 6, at end insert: —
'(3) The reserve scheme personal pension shall be payable until the death of the pensioner, but should he die before the expiry of a five year period from the date of the first payment, it shall be paid to his widow until the expiry of the said five year period provided that the Reserve Pension Board may for that period if there is no surviving widow or if for any part of the said five year period there is no surviving widow, pay the pension to any dependant of the deceased earner or of the widow'.
This is another attempt to press, in a way which in this case satisfies my hon. Friends, an amendment which I tried to get through in Committee. I am not trying to satisfy the Government, although I hope that they are satisfied by the amendment.
It is desirable to provide for the reserve pension scheme a guarantee that there will be five years of payment of the reserve pension as long as there is a dependant, primarily but not necessarily a widow, to benefit from it. That is what the amendment seeks to do. We should try to make it because the Government, or, indeed, anyone who introduces this sort of pensions system, will need to do something to persuade people of the desirability of making this sort of contribution which large numbers have not hitherto been accustomed to making. Many people will fear that their money will be wasted, that their contribution to the reserve pension scheme will be lost by such a fact as early death and that then their wife will get a lower widow's pension. This point could be dealt with by a five-year guarantee of the sort I recommend, and it is something which some good occupational pension schemes already do.
It also is very cheap provision because most people who live to pensionable age live for a further five years. It is a valuable provision for widows because it helps them to accommodate themselves


to the lower standard of living they will adopt at the end of five years.
When I moved the amendment in Committee the Minister made a number of points in criticism of my argument. He said that it was an inherent feature of insurance that it might be wasted. I suggest to him that this is a different situation, that this is compulsory insurance of a type to which people in this country are currently unaccustomed. If we can guard against the fear of waste and encourage people to co-operate more readily in the development of the reserve scheme, why should the Government refuse so to do when it could be done at such a small cost?
The other argument put forward by the Minister was that the fact that this is done by some good occupational pension schemes was nothing to do with the case. He said that it was done to prevent various types of anomaly within these schemes. He evidently does not believe that it is done on merit. I believe that it is done because managers of the occupational pension schemes believe that it it helpful to their employees and the widows of those employees.
My hon. Friend the Member for Rotherham (Mr. O'Malley), while accepting the general principle of such an amendment, did not like it in one respect in Committee because he feared that the money under my original drafting might simply go to the estate, whether or not there were dependants. He said that he might support me if I made a second attempt. I always welcome his encouragement, and, therefore, I have made a second attempt. I have limited it to the dependants of the beneficiary of the pension system. I had a residual hope that the Government might accept it, but, even they did not, it would give me pleasure if my hon. Friend accepted it.

Mr. O'Malley: I recall the debate which took place on an amendment in Committee where the issue raised by the amendment was considered, and I am grateful to my right hon. Friend for having taken the trouble to draft a revised amendment which certainly meets with my approval, if that is of any consolation to him. I can only hope that since the Government tonight have reached the situation where they have

been almost defeated once, they will not risk the possibility of losing a Division on this amendment and that they will, therefore, accept it.

Mr. Dean: I will not comment on what the hon. Gentleman has just said, because it was clearly meant fairly light-heartedly at this late hour.
The right hon. Member for Birkenhead (Mr. Dell) said that he had tried to meet one of the objections made to a similar amendment in Committee—the possibility of the pension going to the estate, which I think he accepted would not be the most useful way in which the money going into the scheme could be used. But I am sorry to have to disappoint him by saying that the main argument against the amendment, on the analogy with occupational schemes which provide lump sum for death before retirement to which the right hon. Gentleman referred, still holds, because the reserve scheme is in an entirely different position.
It is true that the proposal is in line with certain features which many occupational schemes have included as standard, whereby payment of pension is guaranteed either for a period of years or until the pension payments have used up the contributions paid by the member. These arrangements have a twofold purpose. While the pensioner was still at work cover for widowhood benefit, if provided at all, would commonly be on a group insurance basis and for a lump sum benefit; once he had retired, however, cover for death after retirement was not widespread. Guaranteed payment of pension for a period, therefore helped the transition from the one situation to the other, in case the pensioner died before he had managed to get even his own money's worth out of the scheme.
Secondly, the provision avoided highlighting the position of the member who left the scheme just before he retired and had his contributions refunded, and who would contrast with the member who died soon after retiring. The situation in the reserve scheme will be quite different. Cover for widow's pension will be universal, and will apply to deaths both before and after pension age.
These are still the main reasons, and they still hold good.

Mr. Dell: I did not expect the Minister to accept my amendment. I notice his continuing resistance to any attempt to improve the reserve pension scheme, but it will have to be improved. If the only difference between 7 million members of the reserve pension scheme and the 14 million members of the reserve pension scheme that the Secretary of State was threatening us with, at the end of his last intervention on the tax question, is whether or not a member receives a tax concession on his contribution, I can tell the Minister that there will be far more than 7 million in the reserve pension scheme, because, for various reasons, it will be attractive and for many people better than occupational pension schemes at the minimum level.
Therefore, it will have to be improved, and there will be enormous pressure to improve it. The Government do themselves no good by resisting every attempt to raise the levels of the scheme, as they have done here.
I know that the Government have made one concession to the arguments we have just discussed. They have, with hindsight, agreed to give people some enhancement if they work longer. Much more will have to be done to the reserve pension scheme because of the pressures people will exercise to ensure that they get a decent return on their contributions and that sufficient is done for older people.
However, perhaps the argument is wasted at this time of night.

Amendment negatived.

Clause 77

RESERVE SCHEME WIDOW'S PENSION

Amendment made: No. 92, in page 102, line 43, at end insert:—
' (4) Regulations shall make provision modifying this section in relation to cases where the deceased contributor had made an election for the purposes of section 76(3) of this Act '.—[Mr. Dean.]

Clause 78

DECLARATION OF BONUSES BY RESERVE PENSION BOARD

Mr. Dean: I beg to move Amendment No. 93, in page 104, line 17, leave out from 'pensions' to 'increase)' in line 19 and insert:
' or as between different parts of a pension of any category either by specifying different increases, or by excluding any category or part from the application of any'.
This is a technical amendment, designed to remove uncertainty in the present drafting as to the powers available to the Reserve Pension Board in declaring a normal bonus.

Mr. William Clark: Mr. William Clark (Surrey, East) rose——

Amendment agreed to.

1.15 a.m.

Mr. Clark: Mr. Deputy Speaker, I wished to speak on Amendment No. 93. I find that it is the only way in which I can raise the reserve fund——

Mr. Deputy Speaker: I am sorry. I did not see the hon. Member rise. I had collected the voices and taken a decision. If he had called my attention a little sooner I would, of course, have stopped. However, having taken the course which I have taken, I cannot go back. I am sorry.

Mr. Clark: I am delighted to find that Amendment No. 95 deals with the same clause.

Mr. Deputy Speaker: I cannot take Amendments Nos. 94 and 95 now. I can only take them formally because they have been discussed already. I must ask the Minister to move Amendments Nos. 94 and 95 formally if he wishes to do so.

Mr. Clark: On a point of order, Mr. Deputy Speaker. What does a back bencher do? Whilst you were reading the amendments. I was standing in my place. I think that every hon. Member could see that I was standing in my place. If it is up to me, according to the rules of order, to call out and say "Please, may I speak?", I shall do so. I was standing in my place when you read the amendments.

Mr. Deputy Speaker: That is so. It is normal for an hon. Member to stand in his place and for the Chair to see him there. But, if it happens that the Chair does not see him, it is better for the hon. Member to call the attention of the Chair to the fact that he is there. That often happens. If the hon. Gentleman had done so I should have called him.

Amendments made: No. 94, in page 104,line 24, after 'expedient', insert
'(a)',

No. 95, in page 104, line 26, after 'Board', insert: —
'(b) as to the application of any normal or interim bonus to pensions in respect of which elections have been made for the purposes of section 76(3) of this Act; and
(c)'.—[Mr. Dean]

Clause 79

SUPPLEMENTARY PROVISIONS AS TO RESERVE SCHEME PENSIONS

Amendments made: No. 96, in page 105, line 18, leave out 'or in Scotland assignation '.

No. 97, in page 105, line 21, leave out 'or in Scotland on the sequestration of estate'.

No. 98, page 105, line 24, at end insert:—
' In the application of this subsection to Scotland—

(a) the reference to the assignment of a pension shall be read as a reference to its assignation, "assign" being construed accordingly;
(b)the reference to a person's bankruptcy shall be read as a reference to the sequestration of his estate or the appointment on his estate of a judicial factor undersection 14 of the Bankruptcy (Scotland) Act 1913 or section 15 of the Solicitors (Scotland) Act 1958 '.—[Mr. Dean.]

Clause 89

PRIORITY OF CERTAIN DEBTS IN BANKRUPTCY, ETC.

Amendments made: No. 99, in page 115, line 20, at end insert:
'(a) any sum owed on account of Class 1 contributions (primary or secondary) or Class 2 contributions payable in either case in the

period of 12 months immediately preceding the date of the relevant event'.

No. 100, in page 115, line 46, at end insert:
' (2A) Any priority accorded by the enactments specified in subsection (1) above to debts consisting of income tax assessed and unpaid shall be accorded similarly to debts consisting of Class 4' contributions assessed and unpaid, so far as the debt is owed to the Inland Revenue and not to the Secretary of State'. —[Mr. Dean.]

Clause 93

ORDERS AND REGULATIONS (GENERAL PROVISIONS)

Mr. Dean: I beg to move Amendment No. 101, in page 122, line 44, at beginning insert:
'and where such a power is expressed to be exercisable for alternative purposes it may be exercised in relation to the same case for any or all of those purposes'.
This amendment provides more flexibility in the use of the regulation-making powers provided in the Bill. It enables different powers to be applied to the same category of case.
The particular need for this extension of Clause 93 arises on Clause 5(5), which enables the Secretary of State, with the concurrence of the Inland Revenue, both to except persons from liability for Class 4 contributions—earnings-related contributions by the self-employed—and to defer such liability.
This amendment puts it beyond doubt that the two powers, though
expressed to be exercisable for alternative purposes
in Clause 5(5), may also in fact be applied to the same case where necessary. The effect of the extension will be beneficial.

Amendment agreed to.

Amendments made: No. 102, in page 123, line 13, at end insert:
' (4A) Subsections (1) to (4) above shall apply in relation to powers under Part IV of the former principal Act, and to regulations made in the exercise of such a power, as they apply in relation to powers and regulations under this Act'.

No. 103, in page 123, line 16, after '10'), insert:
' or of Part IV of the former principal Act '.— [Mr. Dean.]

Clause 94

PARLIAMENTARY CONTROL OF ORDERS AND REGULATIONS

Amendment made: No. 104, in page 124, line 1, after 'Act', insert:
' or Part IV of the former principal Act'.— [Mr. Dean.]

Clause 95

FINANCIAL PROVISIONS

Amendments made: No. 105, in page 124, line 27, leave out '70(l)(a)(i)' and insert '70(1 A)(a)'.

No. 106, in page 124, line 28, leave out '70(l)(6)(iii)' and insert '70(lC)(c) '.— [Mr. Dean.]

Clause 96

INTERPRETATION

Amendments made: No. 107, in page 126, line 32, after 'Sunday' insert:
'(except in sections 12(l)(d), 14, 26(1) and 35(2), where the expression is otherwise defined'.

No. 108, in page 126, line 33, leave out "and its Schedules'.

No. 109, in page 126, line 35, at end insert:
'(1A) Except where the context otherwise requires, references in this Act to any Part of it include references to the Schedules of that Part'.

No. 110, in page 126, line 40, leave out subsection (3) and insert:
'(3)' Where under Part I of this Act a person is to be treated by reference to any employment of his as an employed earner, then he is to be so treated for all purposes of this Act, and references throughout this Act to employed earner's employment shall be construed accordingly '.—[Mr. Dean.]

Orders of the Day — Schedule 1

SUPPLEMENTARY PROVISIONS RELATING TO CONTRIBUTIONS OF CLASSES 1, 2 AND 3

Mr. Dean: I beg to move Amendment No. 111, in page 132, line 39, at end insert:
' (cc) for enabling contributions to be treated as paid in respect of a year earlier or

later than that in respect of which they were actually paid'.
This is an amendment designed to simplify administration by avoiding unnecessary work and expense for contributors and for the Department.
It sometimes happens that a person pays contributions in error—for example, for the wrong period, at the wrong rate, or for the wrong class—while at the same time he owes contributions which are properly payable. In such circumstances, it is desirable to re-allocate the contributions which have been paid so as to avoid the need for separate refund and compliance procedures.
Paragraph 6(1)(e) of Schedule 1 to the Bill gives power for such re-allocation of contributions, and it was hoped that this power would be adequate to cover all the types of case which can arise.
However, legal advice now is that the references to contributions
of the wrong class, or at the wrong rate, or of the wrong amount
do not in fact cover certain cases which, though rare, can arise. One such case is where contributions of a particular class—for example, Class 2 contributions for self-employment—are not due for the year in respect of which they are paid, perhaps because the contributor has already reached the annual limit for contributions, under Clause 6(1), by way of Class 1 contributions, but are nevertheless due for an earlier or later year. The amendment enables regulations to provide for the re-allocation of contributions in this type of case.

Amendment agreed to.

Mr. Dean: I beg to move Amendment No. 112, in page 133, line 45, leave out from 'instrument' to first 'the' in line 46.

Mr. Deputy Speaker: With this we are to take Government Amendment No. 113.

Mr. Dean: Both these amendments are merely for the avoidance of doubt. They are clarifying amendments.

Amendment agreed to.

Amendment made: No. 113, in page 133, line 49, at end insert:
'(2) Sub-paragraph (1) above shall have effect notwithstanding anything in any Act, Royal Warrant, Order in Council, order or scheme '.—[Mr. Dean.]

Orders of the Day — Schedule 2

LEVY OF CLASS 4 CONTRIBUTIONS BY INLAND REVENUE

Amendments made: No. 114, in page 135, line 1, after '173', insert:
'of the Act of 1970'.

No. 115, in page 135, line 3, after '175', insert 'of that Act'.

No. 116, in page 135, line 38, leave out from beginning to 'Chapter'.

No. 117, in page 136, line 35, leave out from 'gains' to end of line 36 and insert:
received or receivable by him in the capacity of trustee".

No. 118, in page 136, line 40, leave out from beginning to second 'section'— [Mr. Dean.]

Mr. Dean: I beg to move Amendment No. 119, in page 136, line 41, after '(5)(a)', insert 'and (b)',
This amendment modifies a provision of the Taxes Management Act 1970 in its application to Class 4 contributions. The provision relates to the charging of interest on unpaid Class 4 contributions. It is normal to charge interest on unpaid tax, but interest is not charged on other classes of basic scheme contributions which are unpaid. So far as Class 4 contributions are concerned, the intention is to charge interest only in special circumstances, for example, where the non-payment is wholly or partly attributable to the contributor's fraud, neglect, and so on.

Amendment agreed to.

Amendment made: No. 120, in page 137, line 7, leave out from beginning to 'the'.—[Mr. Dean.]

Mr. Dean: I beg to move Amendment No. 121, in page 137, line 16, after '5(7)', insert 'or (8)'.
This carries out the intention that appeals machinery under the Taxes Management Act 1970 shall not apply to questions arising under any regulation made under Clause 5(8).

Amendment agreed to.

Orders of the Day — Schedule 5

MEANING OF "UNEMPLOYABILITY SUPPLEMENT OR ALLOWANCE"

Mr. Dean: I beg to move Amendment No. 122, page 144, line 9, leave out 'increase of' and insert 'supplement to'.

Mr. Deputy Speaker: With this we are to take Government Amendment No. 123.

Mr. Dean: These amendments make a minor correction to the wording of Schedule 5 and also ensure that cases under the Polish Resettlement Act 1947 are included in the definition.

Amendment agreed to.

Amendment made: No. 123, in page 144, line 13, at end insert:
'or
(iv) by way of supplement to retired pay or pension under the Polish Resettlement Act 1947'.—[Mr. Dean.]

Orders of the Day — Schedule 10

ANCILLARY PROVISIONS AS TO BASIC SCHEME BENEFIT

Amendments made: No. 124, in page 156, line 13, leave out 'or assignation'.

No. 125, in line 15, leave out from 'bankruptcy' to second 'of in line 16.

No. 126, in line 18, at end insert:
'(2) In the application of this paragraph to Scotland—

(a) the reference to assignment of benefit shall be read as a reference to its assignation, "assign" being construed accordingly;
(b) the reference to a beneficiary's bankruptcy shall be read as a reference to the sequestration of his estate or the appointment on his estate of a judicial factor under section 14 of the Bankruptcy (Scotland) Act 1913 or section 15 of the Solicitors (Scotland) Act 1958'.—[Mr. Dean.]

Orders of the Day — Schedule 12

THE NATIONAL INSURANCE ADVISORY COMMITTEE

Mr. Dean: I beg to move Amendment No. 127, in page 159, line 43, at end insert—
'and regulations under Schedule 23 to this Act made before, or within a period of 12 months beginning with, that day'.
The purpose of this amendment is to remove from the requirement to refer to


the National Insurance Advisory Committee any transitional regulations under Schedule 23 made within a period of 12 months after the appointed day.
As the Bill is drafted, proposals relating to transitional regulations made under Schedule 23 to the Bill do not need to be submitted to NIAC if they are made before the appointed day. It is envisaged that most transitional regulations will, in fact, be made before the appointed day but the need to make certain minor adjustments to those regulations may not become apparent until after the new arrangements have come into operation.
The chairman of NIAC has indicated his agreement to this minor extension. The Secretary of State would, of course, still be able to refer such regulations to NIAC, if circumstances allowed, under the general power in Clause 47(1)(b).

Amendment agreed to.

Mr. Dean: I beg to move Amendment No. 128, in page 160, line 2, leave out from 'to' to end of line 3 and insert 'the Attendance Allowance Board'.
Schedule 12, Part III, paragraph 17, exempts from the requirement to refer to the National Insurance Advisory Council regulations relating to matters that have been referred in accordance with the Bill to another body. The amendment makes explicit the intention that this exemption is in practice directed to regulations that have been referred to the Attendance Allowance Board. It thereby removes any impression that might otherwise be given that the exemption power is wider than, in fact, is the case.

Amendment agreed to.

Orders of the Day — Schedule 14

REQUIREMENTS AS TO PRESERVATION OF BENEFIT UNDER OCCUPATIONAL PENSION SCHEMES

Mr. Dell: I beg to move Amendment No. 129, in page 166, line 39, at end insert:
'Where an alternative prescribed under sub-paragraph 2(b) above includes payment by way of return of contributions and such payment is in respect of a period of service of two years or more, the amount repaid shall be supplemented by interest on those contributions

accruing at a rate not less than that laid down by the Occupational Pensions Board for the purposes of this subsection'.
It falls to me to move the last Opposition amendment. The Opposition have done the best they can. We have made a few amendments but the Bill remains a poor thing, and I am glad that it is the Government's own.
Here is the Government's last opportunity to make a slight amendment if they can agree that where contributions to occupational pension schemes are paid back into the reserve pension scheme and there is in addition a return of contributions and the period is in excess of two years there shall be a payment of interest on the contributions. The justice of that proposal is self-evident and I need say no more.

Mr. Dean: As the right hon. Gentleman says, he is moving the last Opposition amendment to the Bill, and I am sorry not to be able to give him a very encouraging reply before we draw stumps, much as I should like to be able to do so.
There are arguments both of principle and practice against acceptance of the amendment. First, as to principle, Schedule 14 is primarily concerned with establishing a system of preservation. Although it has seemed proper in the interests of flexibility and convenience to allow certain alternatives to preserved benefit, it would be alien to the central aim of the legislation to enter into the field of regulating refunds of contributions. The fact that the amendment relates to service of two years or more would also mean extending legislative requirements below the five years' service period set as a qualifying condition. To do so in this manner could not be justified as a necessary adjunct to the preservation strategy.
Refunds of contributions will be permitted in respect of service given before the operative date of the legislation, but this is essentially a transitional provision. We have laid down the twin qualifying conditions—five years' pensionable service and attainment of age 26—and made sure that people with less than this service need not lose out either. They will be covered either by benefits under a recognised scheme or by the reserve scheme. Already schemes, especially centralised schemes, are considering whether they will


adopt lower qualifying conditions and thus do away with refunds altogether, even for less than five years' service. I hope that this will be increasingly the trend, and we do not think it appropriate to regulate as to the amount of a refund that a member receives.

Mr. George Cunningham: That is no reason whatever.

Amendment negatived.

Orders of the Day — Schedule 17

SUPPLEMENTARY PROVISIONS AS TO RESERVE SCHEME PREMIUMS

1.30 a.m.

Mr. Dean: I beg to move Amendment No. 130, in page 178, line 46, at end insert: —
'5A. Regulations may in relation to reserve scheme premiums provide—

(a) for treating a premium paid at or after any prescribed time as paid at some other time (whether earlier or later);
(b) for enabling a premium to be treated as paid in an income tax year earlier or later than that in which it was actually paid;
(c) for treating a premium wrongly paid, or paid as to the wrong amount, as paid (wholly or in part) in discharge of a liability for another premium, or for reserve scheme contributions;
(d) for the return of premiums paid in error or, in prescribed circumstances, of premiums as to which the Secretary of State is satisfied that they ought to be repaid;
(e) for any other matters incidental to the payment, collection or return of premiums'.


This is a technical amendment.

Mr. William Clark: We are here dealing with the reserve scheme premiums. Throughout the earlier stages of the Bill, I have been worried about whether the premiums will retain the value that employees have put in. I raised this matter on Second Reading.
Unless the reserve fund is completely free of political manipulation, the pensions of reserve scheme pensioners could be in jeopardy. I will not weary the House with the facts and figures. Suffice it to say that by the end of this century the reserve fund, especially with the credit for tax which unfortunately is now in the political cockpit, probably will add up to £10,000 million.
I remind my right hon. Friend the Secretary of State that the total equity capital in this country is some £50,000 million in quoted companies and about £12,000 million in unquoted companies. In other words, in respect of our main industry we have a total equity, quoted and unquoted, of £62,000 million. Under the reserve scheme—and this is vital to the value of the premiums—the board can invest up to 10 per cent. in the equity of any one company. It is easy to see that, after some time——

Mr. Dell: The hon. Gentleman is wrong. The limitation is in respect only of quoted companies. If they are not quoted, the board can take up to 100 per cent.

Mr. Clark: That adds weight to my point. I am grateful for the right hon. Gentleman's support. But even a 10 per cent. holding will mean that the Government, indirectly, will have control of the country's industry. In the view of the Opposition, of course, that is good. They like the fact that this avoids the need for any further act of nationalisation.
It is wrong for the reserve scheme to be used for political purposes. I remember too well how a previous Labour Government used such a fund in that way. The unemployment fund had total assets of about £700 million. When Mr. Dalton was Chancellor of the Exchequer the investment policy of the unemployment fund changed simply because of the cheap money policy being run by the Government of the day. I do not necessarily argue with that. But £250 million of the unemployment fund was invested in Dalton 2½s. Hon. Members on both sides of the House will realise how serious this could be for the reserve fund when they consider the price of Dalton 2½s today. In real terms Daltons today are probably worth £6 compared with £100 when they were issued. This is the fear I have.
My right hon. Friend has been kind enough to correspond with me and discuss this. I am still not convinced that the Government, particularly a Conservative Government, should put all this amount of money into the control of any one fund. Any Government have the right to tax but taxation goes from year to year. One Government will think that


they must improve welfare services, another will concentrate on something else, and so on. That is fair enough and is the prerogative of any Government. What is not the prerogative of any Government is to take contributions from employees and then use them for political ends.
Perhaps it is too late, but I will certainly pursue this point. May be in another place we can make some amendment to the running of the reserve fund. This fund could easily be fragmented by the issue of franchises to different consortia of insurance companies which would be regulated. They must pay the right pension and all the rest of it. The management could easily be controlled. This is done with unit trusts. There is nothing difficult about it. It would mean that the investment policy of the reserve fund would be fragmented, in different hands. This would be good because there would be no one single large investor.
As my right hon. Friend knows, any large investor who gets a 10 per cent. holding in any one company effectively controls that company. If this money in the reserve fund is not invested wisely the premiums paid into it by contributors could be eroded. With franchises and fragmentation I am certain that the premiums of the contributors would be worth more. If we had a huge fund the investment policy of which was in the hands of a board under the nomination of the Government of the day it would lead to complications. I hope my right hon. Friend will take this point seriously. I do not accept the administrative argument. I do not accept that it is impossible to fragment this huge fund. I beg my right hon. Friend to think again——

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Member. I am trying to be as lenient as I can to make up for my rough treatment of him earlier. He is straying somewhat from the point. He has made his point, and I think that the Minister is apprised of it. I hope that he will help me.

Mr. Clark: May I in conclusion thank you, Mr. Deputy Speaker, for your tolerance. I am delighted that you are convinced my right hon. Friend has taken the point. I hope that he will take some action.

Mr. Dean: I very much understand the point made by my hon. Friend the Member for Surrey, East (Mr. William Clark). I hope he will be reassured by what I have to say. To deal first with his fears about political manipulation, I remind him that the Reserve Pension Board will have a clear statutory duty laid upon it in Clause 71 to exercise its functions with paramount regard to the interests of existing and future pensioners. I hope he will feel that that is a clear directive.

Mr. Clark: My hon. Friend will surely accept that no Government can commit a future Government. The stipulation in the Bill is not irrevocable. It can be changed by any Government.

Mr. Dean: I accept that. My hon. Friend will equally accept that this would be so with any arrangement. Any future Parliament can unmake what an earlier Parliament has made.
Another safeguard that will be of considerable importance is that the Reserve Pension Board will have pretty extensive powers and because of this we should be able—I am confident we shall be able— to get men of considerable calibre to run the scheme—people who will use their independent judgment, as the statute provides. Under the proposals, they will be free to decide, apart from the limitation on voting capital in companies, the way in which the investment will be made and the form of the investment, and if they wish, as they may well—it is not for me to say—to fragment the investment or to use the established institutions for the investment, they will be able to do so. The statute leaves them free to use their judgment as to the best way in which this should be done.
My hon. Friend mentioned the question of the size of the fund. It is difficult to say what the size will be because we do not know with precision how many people there will be in it. However, I accept that the chances are that it will be a fairly large sum going for investment from one source. But equally he will accept that, compared with the total money being invested by occupational pension schemes, it will be a comparatively small sum.
We have given a good deal of thought to the question whether, instead of assiging the whole responsibility for investing


the reserve pensions fund to a single board, we should legislate for dividing up the investment between a number of different bodies. We have concluded that this would be against the interests of reserve scheme members whose pensions will depend in amount upon the success of the investment policies pursued. If we laid down in the statute the way in which the reserve pension fund was to be divided between different sectors of investments—gilt-edged securities, equities, property, and so on—this would introduce a rigidity into the arrangements which would inhibit the adaptation of investment spread in the light of the circumstances at the time and would therefore be prejudicial to successful investment. If, on the other hand, we gave power for the Government to issue directives on investment strategy we should be failing to insulate the board from political pressures and would again be prejudicing their prospects of success.
Having given a good deal of thought to this matter, we felt that the best way to safeguard the interests of the members and to insulate the board from what would be wholly undesirable political pressures was to give substantial powers to them under the statute and to leave it to their judgment to decide the way and form in which the investment should be made in the interests of the members of the scheme.

Amendment agreed to.

Orders of the Day — Schedule 19

PART IV OF THE NATIONAL INSURANCE ACT 1965

Amendments made: No. 132, in page 181, line 22, leave out '65(1) of the Act' and insert:

'65 of the Act,—
(a) in subsection (1)'.

No. 133, in line 24, at end insert:
'(b) in subsection (2), for the words from "send notice" to the end of subsection substitute—
give notice in writing of his intention to do so—

(a) in a case where the question arises on an application made to the Secretary of State, to the applicant; and

(b) in any case to such persons as appear to him to be concerned with the question"'.

No. 134, in page 183, line 20, at end insert:
'and applies as regards the effect to be given in any proceedings to any decision, whether the decision was given or the proceedings commenced before or after the passing of the Social Security Act'.

No. 135, in page 185, line 12, leave out from 'shall' to end of line 14 and insert:
'give notice in writing of his intention to do so—

(a) in a case where the question arises on an application made to the Secretary of State, to the applicant; and
(b) in any case to such persons as appear to him to be concerned with the question'

No. 136, in page 190, line 33, at end insert:
'and applies as regards the effect to be given in any proceedings to any decision, whether the decision was given or the proceedings commenced before or after the passing of the Social Security Act'.—[Mr. Dean.]

Orders of the Day — Schedule 21

PROCEEDINGS

Mr. Dean: I beg to move Amendment No. 137, in page 204, leave out lines 17 to 23.

Mr. Deputy Speaker: We can also discuss Amendment No. 139.

Mr. Dean: These amendments ensure that it will be possible for the existing provisions for recovery of unpaid contributions under the present scheme to be applied, with any necessary modification, during the transitional period after the appointed day.

Amendment agreed to.

Orders of the Day — Schedule 22

ADAPTATION OF THIS ACT FOR NORTHERN IRELAND

Amendment made: No. 138, in page 211, line 2, leave out paragraphs 26 and 27.—[Mr. Dean.]

Orders of the Day — Schedule 23

TRANSITIONAL PROVISIONS

Amendment made: No. 139, in page 218, line 8, at end insert:
'2A.—(1) Regulations may make such provision as the Secretary of State thinks appropriate for enabling unpaid contributions under the former legislation to be recovered and disposed of under paragraphs 9 to 14 of Schedule 21 to this Act (applying those paragraphs by analogy and with the necessary modifications) in the case of a person being convicted of such an offence as is mentioned in paragraph 7 or 8(a) of that Schedule committed in the period of two years beginning with the day appointed for the coming into force of section 2 of this Act.
(2) For this purpose—

(a) "the former legislation" means the former principal Act, section 1 of the National Health Service Contributions Act 1965, section 2(1)(a) of the Industrial Injuries Act and section 27 of the Redundancy Payments Act 1965; and
(b)"contributions" includes payments in lieu of contributions for the purposes of Part III of the former principal Act'.—[Mr. Dean.]

Motion made, and Question proposed, That the Bill be now read the Third time. —[Sir K. Joseph.]

[Queen's Consent, on behalf of the Crown, signified.]

1.45 a.m.

Sir B. Rhys Williams: It may not be inappropriate to say a very few words on the Third Reading of this great Bill. There have been controversies in the last few days between my right hon. Friend and myself. I will not mention any other Members. My right hon. Friend has won on critical but not primary points by narrow majorities, one being the tax treatment of the contributions of the reserve scheme members, the other the method of protection of occupational pension rights on change of employment.
As to the first, I would like to suggest to my right hon. Friend that the tax credits scheme will change the situation and enable him to come forward with new proposals which will, I believe, be satisfactory to us all. On the second, he has an opportunity now to make provision either through regulations or amendments in the other House to give effect to what he and I and all other Members are trying to achieve.
What is good about the Bill and makes it so important is that it obeys the fundamental rule of human society that from each year's crop so much is shared between all the members of the community and so much is set aside as seed corn for the future. The Bill makes a firm distinction between citizenship benefits based on the principle of the redistribution of income, and personal entitlements related to individual career records. It lays the foundation for a major social advance based on the most deeply rooted human instincts.

1.47 a.m.

Mr. George Cunningham: Despite my respect for the hon. Member for Kensington, South (Sir B. Rhys Williams), particularly for his actions earlier this evening, I find it impossible to allow the words he has just uttered to be the last words here on the subject of this Bill.
There is one test, and only one, by which a major piece of social security legislation like this must be judged. At the moment there are vast numbers of people who are dependent upon supplementary benefits. None of us likes that situation. The only way in which we can judge a Bill like this is to assess whether it is likely to get most of those people off supplementary benefits. By that I mean not most of those now on supplementary benefits but the equivalents of those people. This Bill will simply not do that.
When we vote money for supplementary benefits and other such payments we always regret it, even though we willingly do it, because we regret the circumstances which make it necessary to vote the money for that purpose rather than use the money which those people have put aside during their lives. The House would be prepared, I believe, to vote money to see us through some finite period till a piece of legislation were passed to ensure that each person gets in his retirement an adequate pension because he had been obliged—I do not run away from the term "forced"—to save for it during his life. If we were sure that in the year 2020, or some date about as far ahead as that, there would be an arrangement to achieve that objective, so that tax payments were no longer required of people after retirement age, I think the House would vote the money to see people through on a progressive basis till


that date is reached. I think the country would support that.
The great failure of the Bill is that it does not achieve that. In the year 2020, although we shall not be in as bad a position as we are now, we shall certainly have got nowhere near the stage where each employee has a pension after retirement which he has earned by his own enforced savings during his working life. That is why the Bill is grossly inadequate and, when a Labour Government returns to power, it will have to be replaced by something which meets the real situation.

1.50 a.m.

Mr. Marks: Earlier my right hon. Friend the Member for Birkenhead (Mr. Dell) described the Bill as a poor thing and the Government's own. I echo his sentiments that they are welcome to it.
The Bill is inadequate. It does nothing for existing pensioners, it does not do enough for the disabled, and it does not give women their rights as equal citizens.
The Bill leaves occupational pension schemes with tax relief where those schemes have more lower-paid workers than the reserve scheme which we have debated tonight. Schemes such as the Post Office scheme with low-paid postmen, the railways scheme with low-paid railwaymen and Government schemes— the Government are one of the largest employers of low-paid workers—will have tax relief, whereas the rest will not.
Therefore, particularly as a result of tonight's debate, this Bill deserves a title similar to that which a previous Conservative Government's Bill was given—Tory Swindle (No. 2) Bill.

1.51 a.m.

Mr. O'Malley: The Opposition said that the Bill was bad and voted against it on Second Reading. Having examined and attacked it both in Committee upstairs and on Report in the House, we see no reason to change our minds. We oppose the fundamental philosophy underlying the Bill and deplore the inferior treatment that is given to women in it.
We very much regret that well into the twenty-first century people in retirement will still be dependent on means-tested

supplementary benefit as a result of the system set up by the Bill. We intend, when we return to office to substitute for it a system of national superannuation and national insurance which will ensure that people will be able to live without a sharp fall in income during retirement and enjoy a retirement of dignity rather than of deprivation which will be a feature of life under the terms, structure and financial arrangements of the Bill.

Question put and agreed to.

Bill accordingly read the Third time and passed.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jopling.]

Orders of the Day — ITINERANT TINKERS

1.53 a.m.

Sir Gilbert Longden: I thank my right hon. Friend the Minister for Local Government and Development for coming to the House tonight and regret having had to bring him here, at this late hour, especially as my noble Friend the Under-Secretary in another place has been dealing with this important matter which vitally affects my constituents.
On 15 th May 1964—nearly nine years ago—I initiated a debate in this House on the nuisance then being created in my constituency by itinerant caravan-dwelling tinkers and asked how much longer we were to
tolerate the hideous and insanitary mess which they make of our countryside".
But I asked, too, how we could help these people to lead a normal life for the benefit especially of their children. I then said:
There is nothing wrong in living in a caravan. This is a free country, but liberty has here degenerated into licence … these people do not give one of their own proverbial cusses for what they do in and around the places where their caravans have rested. They trade in junk and scrap metal and find it much cheaper to ply their trade on grass verges, paying neither rent nor rates and leaving local authorities to clear up the mess … they have forfeited their right to that"—
tolerance—
by showing an utter disregard for other people's enjoyment of the countryside and


a carelessness for their neighbour's health, convenience and property ".—[OFFICIAL REPORT, 15th May 1964; Vol. 695, c. 779–80.]
Precisely the same can be said of the condition of the road in question today, and there is a rising tide of public anger that its continuance should be tolerated.
One of several hundred letters that I have received is from a doctor, who says:
As a doctor I am very concerned at the obvious health hazard of allowing itinerants to camp on the verges of the A41 … They do not dig latrines and the Public Health Inspector tells me that he doubts whether they consistently use the chemicals required for the destruction of sewage. One must therefore assume that the grass verges are nothing less than open sewers within a few hundred yards of the two reservoirs supplying water to this community…
Apart from the health aspect, these people are blatantly flouting the anti-litter laws by dumping piles of garbage, prams, broken cars, etc., on the verges.
In 1964 the Hertfordshire County Council told me that the Ministry's solution, conveyed in circular No. 6/1962, was that sites must somehow, somewhere, be found where these didicoi could bring their caravans to permanent rest, with a proper water supply, hardstanding and sanitation, and from where their children could be properly educated and discouraged from following the same way of life themselves. So the Hertfordshire County Council set about finding sites— and overcoming the objections of the people in whose locality the sites were found—the largest being in the Bushey district in my constituency. There was no further trouble for some years thereafter.
In the debate in May 1964, I suggested certain remedies in addition to that one specific of the Ministry. The first was that dealers in scrap metal should be registered. The answer was that Section 86 of the Public Health Acts Amendment Act 1907 provided for such registration, but only in those areas where the local authority had adopted the provisions of the Act, and I so informed my local authorities.
Next, I suggested that regional co-operative efforts should be made to dispose efficiently and economically of old motor cars and other bulky junk. The following year, the Ministry published circular No. 8/65 on the "Disposal of Old Motor Vehicles" which was meant

to be helpful; but I am convinced that much more energetic and determined action could and should be taken to solve this problem, which will increase as every year goes by. The breaking-up of obsolete motor cars should be a profitable public enterprise.
Thirdly, I suggested that the maximum penalties for these misdemeanours should be increased, and this has to some extent since happened.
In his reply, my right hon. Friend the present Secretary of State for Social Services stated that the then Government's policy was to encourage local authorities to provide the sites necessary to enable these didicoi to lead
a more stable and civilised form of life
and that because, if a site was offered by an authority, it might attract scores if not hundreds of families, the Government would press all the councils involved to act simultaneously.
Of all the counties so "pressed" Hertfordshire has responded the best; and on 9th August last my right hon. Friend the Minister for Local Government and Development was able to tell me that
Hertfordshire comes out top of the league … It has done extremely well in making provision.
But it has not done well enough because Section 12 of the 1968 Act provides only for designation of the whole area of a county or borough site-providing authority, and the Secretary of State will not designate Hertfordshire.
I told my right hon. Friend on that occasion that it was disheartening that, since other counties and boroughs had not responded so well, the tinkers simply came pouring back into Hertfordshire. My right hon. Friend replied that
When a county … has provided a sufficient number of sites for those gipsy families who are residing there at that time, it can then ask the Secretary of State for a designation order which will allow it to evict other gipsies."— [OFFICIAL REPORT, 9th August 1972; Vol. 842, c. 1796–7.]
As I have said, for some years after 1964 the position improved; but it is now quite as bad again, or worse. My file of constituents' letters of complaint is inches thick. The seeming inability of the Government to enable effective action to be taken is seriously damaging their


standing in the eyes of my constituents. All that was said by my hon. Friend the Member for Orpington (Mr. Stanbrook) in the debate which he initiated on 19th April about his part of Kent applies to my part of Hertfordshire.
The Clerk to the Hertfordshire County Council has written to the Secretary of State:
The situation along the A.41 road in the Bushey and Watford areas has reached alarming proportions, and opposition to this is accentuated by the existence, just off the road, of an authorised camp managed by the County Council, catering for some 27 families, which has been in existence since 1964 … but … with the provision of more sites, the public acknowledgement of their virtues, come more families. Not only are there more families, but they tend to congregate in the areas where the permanent camps already are … Very serious consideration should be given to the designation of areas smaller than whole counties.
The Bushey Urban District Council has written innumerable similar letters which were summarised in its statement of the case to my noble Friend Lord Sandford, who was good enough on 22nd February to receive a deputation of local authorities principally concerned, including representatives of the Hertfordshire County Council, Bushey UDC, Watford RDC, St. Albans City, and Harrow and Watford boroughs. Later he arranged for a meeting of the officers of some of these authorities.
But what has been the outcome? Why are these people allowed to cover the countryside with litter when they pay neither rates nor taxes and when others are liable to a fine of £100 for dropping a bus ticket? Why are these people permitted to carry on their business when others would have to comply with the Town and Country Planning Acts or be served with an enforcement notice? Why do other counties and boroughs not fulfil their obligations, as Hertfordshire has done?
It is not, as the Under-Secretary of State seems to think, for my local authority to suggest alternative sites. Bushey has done its bit. But if Watford and Harrow, for example, were each to find 15 pitches, that would immediately remove 30 families.
For some time the Department insisted that the only solution was the provision of

sites. More recently it has tended to urge that more use should be made of the existing laws of the land, especially of Sections 121, 124 and 127 of the Highways Act 1959, the Litter Acts 1958 and 1971 and the Public Health Acts.
But the police are inhibited and frustrated by circular 49/68, which dealt with the enforcement of the Caravan Sites Act 1968 and which has been left unamended by the present Government. Sections 10 and 11 of that Act prohibit unauthorised camping by gipsies and enable local authorities to obtain orders from the magistrates' court to remove caravans from any land on which they have been stationed without permission But these powers, according to that circular, cannot be used until the Minister considers that sufficient sites have been provided for gipsies in a given site-providing area and has, therefore, made a designation under Section 12 of that Act.
The circular also reminds local authorities, in paragraph 15, that
Ministers have repeatedly emphasised that gipsies should not needlessly be moved on from place to place until sites have been provided for them.
But where, as in Hertfordshire county as a whole and in Bushey in particular, a reasonably adequate number of sites has been provided, cannot my right hon. Friend imagine the frustration of those authorities and of the police at having their hands tied by what has now become a wholly misplaced leniency? They have to face the criticisms of an outraged public who think that they are grossly failing in their duty.
I ask the Government to do three things: first, forthwith to designate an area in South-West Hertfordshire in which the local authorities have fulfilled their obligations in providing sites, so that those authorities may now obtain court orders to enable them to remove unauthorised caravans from the roadside. If legislation is required, I am prepared, with Government co-operation, to introduce a Ten-Minute Bill; secondly, to insist that other local authorities, which have not yet done so, shall fulfil their obligations to provide sites; thirdly, to remove any brakes inhibiting local health authorities or the police from strictly enforcing the existing laws.
My noble Friend, writing to me on 3rd May, said:
I am hopeful that the further discussions which are being pursued will lead to a satisfactory solution on the A.41".
All my constituents share that hope.

2.5 a.m.

The Minister for Local Government and Development (Mr. Graham Page): I fully realise the concern and anxiety of my hon. Friend the Member for Hertfordshire, South-West (Sir Gilbert Longden) about the unauthorised encampment of about 60 families in caravans on the two- or three-mile stretch of verge of the A41 between Bushey and Watford. I fully realise, too, the intense local feeling of my hon. Friend's constituents at this affront to the amenities, this, as he called it, "hideous and insanitary mess", this exhibition of crude living and derelict working on the edge of a busy main road. It really is a social eyesore if ever there was one. But the solution to it has evaded all of us up to the present.
We had hopes in Parliament in 1968 that a solution to this kind of case had been found. An obligation was placed by Parliament on local authorities to provide sites for the caravans of gipsies
residing in or resorting to the area".
The reward for a local authority—if one may so put it—for observing that duty is an order by the Secretary of State making unauthorised caravan camping a criminal offence.
Eleven of those orders have been made so far but those 11 orders relate to county or London boroughs. In such boroughs the duty is discharged by the provision of 15 pitches. In counties there is no such convenient provision. The counties have to provide enough sites to deal with those who reside in or resort to their county.
Hertfordshire County Council has made valiant efforts to carry out this statutory duty placed on it by the 1968 Act. In 1965, before that Act came into operation, the census showed that Hertfordshire had 98 gipsy families. Up to now the county has established 89 pitches, and it proposes to establish 125 more.
I am justified in repeating what I have told my hon. Friend. In these provisions Hertfordshire comes out near the top of the league of counties. It is thought now that the 98 families of 1965

have increased to about 200 families. There is some strength in the argument that, as my hon. Friend has put it, the provision of pitches without, at some stage, the rewarding order from the Secretary of State making caravan camping a crime, attracts more gipsies into the area. But up to now the Secretary of State has not been in a position by law to make the order designating the area as one in which it would be a criminal offence to camp with a caravan on an unauthorised site. He has not been able to make that order because, on Hertfordshire's own figures of 200 families as against 89 pitches provided, the provision required by the Act has not been made.
It could be argued that, particularly as a result of the co-operation of the Bushey Urban District Council with the county, adequate provision has been made in the south-west of the county. On the basis of that argument my hon. Friend has asked that the Secretary of State should make an order applicable to that part of the county. Unfortunately, as the law stands, my right hon. and learned Friend has no power to do that.
We must look for a solution within the framework of the existing legislation. I wonder whether Parliament ever intended to put the counties in the position in which Hertfordshire now finds itself —a sort of "Alice Through the Looking Glass" situation, running faster and faster in order to keep in the same place; that is, the more pitches it provides, the more gipsy families arrive. I do not think that Parliament ever intended that. The obligation is to provide adequate accommodation for gipsies
residing in or resorting to the area.
I should like to quote the sections of the Act, because they are particularly relevant. Section 12 states:
The Minister may by order made on the application of any local authority … designate the area of that authority as an area to which section 10 of this Act applies"—
that is to say, an area where it is not possible for a gipsy to station a caravan. It goes on to say:
The Minister shall not make such an order in respect of any area unless it appears to him either that adequate provision is made therein for the accommodation of gipsies residing in or resorting to the area, or that in all the circumstances it is not necessary or expedient to make any such provision.
Later in the Act gipsies are defined as
persons of nomadic habit of life".


I would not say as a result of Hertfordshire's figures that the county qualifies for an order at this stage, but, as the proposed establishment of further pitches proceeds, the time will come when it will not be expedient to continue to provide accommodation for roadside campers such as those on the A41 who have become such a permanent part of the landscape as to be unrecognisable as
persons of nomadic habit of life".
I am not abandoning the policy of the present and previous Governments that gipsies should not be moved around needlessly unless they have somewhere to go. Our policy remains one of non-harassment of gipsy families. That policy does not mean however, that we condone those activities which clearly should not be tolerated. We at least recognise that local authorities have the powers to deal with such activities, and they should exercise those powers. I do not think that they are quite as restrained as my hon. Friend said.
There are difficulties about enforcement, but the difficulties are mainly evidential. Evidence connecting a person with the nuisance is not often forthcoming. On traffic and other offences I am assured, however, that the police enforce the law against gipsies in the same way as they enforce it against other members of the community. The Civic Amenities Act enables local authorities to remove abandoned vehicles and the Public Health Act enables them to serve notices and to take action in cases of serious nuisance and insanitary conditions. But the difficulties surrounding the law which is designed to protect the amenities and the environment underline the importance of achieving a permanent solution to the problem.
The general policy of not harassing gipsies and of not moving them around unless there is somewhere for them to go is right. But I recognise that there may be conditions in which a departure from that policy may be justified. There is a need for a degree of flexibility in a situation where sites have been provided in an area, as in Hertfordshire, and where there is a particularly serious amenity problem due to unauthorised encampment as there is on the A41. I can well see that there are strong grounds for the district council and the residents being relieved of this

environmental problem. When the county has gone a long way to performing its duties under the Act, every tinker, tailor, soldier and sailor who becomes a squatter on the verge must not expect the benefit of clergy, or perhaps I should say the immunity of verger. The A41 is not the sanctuary of the temple right up to the time when the pitches which are provided balance exactly the number of gipsy families in the county.
I accept that this immunity must cease at some point before that. We shall not wait until the pitches provided by Hertfordshire balance exactly the number of gipsy families there, because I think that included in that estimate are families, such as those on the A41, who are not true gipsies within the definition of the Act. They are persons who cannot be designated as people
of nomadic habit of life
when many of them have been there for so long. Therefore, we shall pursue this matter both in regard to the provision of sites and with respect to the steps that may be taken to clear that stretch of the A41.
I cannot wave a wand at this moment and say that we shall clear the site tomorrow. I know that my hon. Friend has been rightly persistent about this for a matter of 10 or 12 years, and I wish I could say that I could do something effective about it tomorrow. I hope he will realise that I have put over tonight something which is a little new in our policy and that we are not saying to counties "you must provide for every caravan family in your district before we make a designation order providing that it is an offence for gipsies to station caravans in an unauthorised place". We are saying to counties "You provide, as Hertfordshire is doing, a considerable number to meet the needs of the true gipsies, and then we think we can in law operate the Act."
The Secretary of State is bound by the law. He cannot make an order except within the provisions of the Act. But where a county has provided the sites, and is preparing to provide a lot more, I think we must help in applying the order as soon as we can and interpret the Act in favour of the county.

Question put and agreed to.

Adjourned accordingly at seventeen minutes past Two o'clock.